Exchange Rate

Part of Prayers – in the House of Commons at 12:00 am on 16th June 1988.

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Photo of Mr Nigel Lawson Mr Nigel Lawson The Chancellor of the Exchequer 12:00 am, 16th June 1988

There is no balance of payments crisis. The current account of the balance of payments inevitably fluctuates over time, and the only need for a balance is over a long period, not in any particular year. Over the previous eight years we have had a cumulative current account surplus of over £21 billion. This year I forecast a deficit of £4 billion. I have seen the revision, and there may be further revisions, as there frequently are. It is now likely that the deficit for this year will be larger—I cannot say how much larger—than I forecast at the time of the Budget, but there is no hint of a crisis, and that is fully understood by the markets and by those who are economically literate.