Balance of Payments

HC Deb 28 January 1969 vol 776 cc1089-93

13. Mr. Sheldon

asked the Chancellor of the Exchequer what estimate he has now made of the balance of payments outturn for 1969.

14. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer if he will now make a statement on the balance of payments outturn for 1968 and his latest estimates for the corresponding figure for 1969.

26. Mr. Marten

asked the Chancellor of the Exchequer if he will make a statement on the balance of payments for the second half of 1968.

28. Mr. Cronin

asked the Chancellor of the Exchequer what estimate he has made of the balance of payments outturn for 1969.

31. Mr. Dickens

asked the Chancellor of the Exchequer if he will make a statement on the estimated balance of payments outturn in 1969.

Mr. Roy Jenkins

I have nothing to add to the Answer given to a similar Question on 21st January.—[Vol. 776, c. 229–30.]

Mr. Sheldon

Since the level of exports unfortunately is not going ahead as rapidly as was hoped for, and since there is probably little more that can be done to help in this direction, will my right hon. Friend turn his attention to the other side of the equation—the level of imports—in a situation where he can act; and will he do something about the obsessional fear that the Treasury has concerning import quotas?

Mr. Jenkins

The Treasury has no obsessional fears. My hon. Friend is not right in saying that the level of exports is not going ahead as rapidly as was hoped. In fact, we are ahead of our export hopes. As my hon. Friend and the House knows, imports, although they have not increased but have indeed turned down slightly, have remained at a stubbornly high level during 1968, but the House will also be aware that I took certain measures on 22nd November.

Mr. Bruce-Gardyne

Does the Chancellor of the Exchequer recall that 1968 was the fourth successive year in which he and his predecessor forecast a balance of payments surplus for Britain? Can he tell us specifically what is the latest status of his current forecast of a £500 million surplus at the end of 1969? Has it slipped back into 1970 yet or been downgraded?

Mr. Jenkins

Not unnaturally, I suppose I recall 1968 better than the preceding years. I did not in fact forecast a balance of payments surplus. I forecast that we would be in surplus in the second part of the year. We were not in surplus, though the second half of the year was a very substantial and a very necessary improvement on the first half of the year; and I believe that that improvement will continue throughout 1969.

Mr. Marten

Is it not these very judgments which turn out to be wrong which affect the confidence which people can have in our economy? Did not 1968 have the biggest visible trade gap since 1951? How does that compare, for example, with what the Prime Minister was saying at the General Election—again a false judgment?

Mr. Jenkins

It is a very partial look at the balance of payments to single out the visible trade gap. By taking invisibles one has a very different picture, and by taking that balance of payments as a whole there is a different and better picture than one had in 1964. The hon. Member was, therefore, taking partial figures.

Mr. Cronin

Irrespective of the pressures which will be put on him, will my right hon. Friend continue his policy of moderate restraint of consumer expenditure until the balance of payments is under satisfactory control?

Mr. Jenkins

I certainly intend to continue to take whatever measures are necessary to improve the balance of payments.

Mr. Dickens

Does not my right hon. Friend agree that one of the great weaknesses in 1968 was the £456 million of private capital which left this country in the first nine months of the year, the highest figure in any year since 1945? Will he not now learn the lessons of that and take steps in 1969 to restrict private portfolio investment going to Australia and South Africa?

Mr. Jenkins

I would make two points to begin with. First, the point made by my hon. Friend is in direct contradiction to the points put to my right hon. Friend the Chief Secretary from the benches opposite in arguing that we were completely starving the country of overseas investment. Secondly, as I have pointed out to my hon. Friend previously, it is misleading to take the gross outflow without taking the net capital position, which, although, in my view, not satisfactory—certainly not in the first six months of the year, although in the third quarter there was a substantial surplus in capital account—is very different from the picture given by taking merely the outflow without dealing with the inflow as well.

Mr. Barnett

Would it not be more realistic and still quite satisfactory to talk of a surplus for 1969 at the rate of about £200 million rather than £500 million? Would not this give us greater opportunity for a higher level of growth and employment?

Mr. Jenkins

No, I do not think so. Indeed, the position in 1968 from a growth point of view has not, I think, been unsatisfactory. Nineteen sixty-eight was a strong year for growth and, I may say, has been almost the only year for a decade or more past—the only year, I think—in which we have combined a reasonably high rate of growth with an improved balance of payment position. In every other year in which we have had a substantial rate of growth, we have had a worsening balance of payment position. We need it to improve still further, but it has been improving considerably with a high rate of growth.

Mr. Higgins

Will the Chancellor publish in the OFFICIAL REPORT an amended forecast taking into account the actual performance of the economy as against the figures which he originally put in the Financial Statement?

Mr. Jenkins

No, Sir. I put figures in the Financial Statement. I intend to put some figures in the next Financial Statement.

Sir Knox Cunningham

They will be wrong.

Mr. Jenkins

It is no good the hon. and learned Member bleating out that they are wrong in that way. What I have indicated—

Sir Knox Cunningham

They are wrong.

Mr. Jenkins

What, I think, is generally the view of the House is that it is desirable and contributes to intelligent discussion, in which I do not expect the hon. and learned Baronet to join, that we should publish the working assumptions, knowing perfectly well that no forecasts will ever be right in all respects.

Mr. Grimond

Will the Chancellor continue to publish his assumptions, which are at least a great step forward from what we had before? As, however, publication of the monthly trade figures has a considerable effect on the confidence on which the balance of payments ultimately depends, are they not becoming more and more misleading as large shipments may take place in or out in any given month? Is the right hon. Gentleman considering publishing the figures in any different form?

Mr. Jenkins

This is primarily a matter in the first instance for my right hon. Friend the President of the Board of Trade, who publishes the figures. I have, however, considered the point and I think that it would be a mistake not to continue with monthly publication. It is increasingly important that publication, whilst giving all the basic facts, should be in such a form as to stress the underlying trends, and I believe that there is indication that people, both here and outside this country, are coming increasingly to look to the underlying trends rather than merely to the fluctuations, which can be very wide from one month to another.

Sir Knox Cunningham

On a point of order. Owing to the unsatisfactory nature of the Chancellor's reply, I will raise the matter again.

Mr. Manuel

The hon. and learned Member will not. He never does.