§ Our first task, then, is to control our expenditure at home. But I come now to the other purpose which I mentioned and which I now examine. The aims of the Budget must take account also of our liabilities overseas. The internal expansion which the Budget fosters must be one which reinforces our external balance of payments as well.
§ There is no need for me today to dwell at length on the vital need to maintain confidence in sterling, of increasing our gold and dollar reserves without accumulating corresponding short-term debts, and of winning a surplus which will enable us to make a worthy contribution to overseas development. I was most deeply impressed, during my recent visit to Australia, by the extent to which the members of the Commonwealth look to us for a lead in developing their and our vast resources. This is the true and up-to-date conception of Commonwealth unity in the economic sphere. These purposes compel us to do all we can both to increase our earnings, particularly from exports, and to enlarge the volume of world trade and the freedom of currencies, especially sterling.
§ I said just now that we had to increase the national product. There is one particular aspect of our policy which I must mention today, namely, finance for exports. There have been complaints from time to time that British manufacturers are being unduly handicapped in many cases by having to finance, either from their own resources or from such credit as they can raise, any credit which they themselves have to give in order to secure export orders for capital goods.
§ We have decided, therefore, that henceforward, the Export Credits Guarantee Department will make rather freer use of guarantees to the banks for major capital goods exports—for those goods which are one of the most valuable types of our traditional exports and which I found on my tour are of particular importance for overseas development. To the extent to which such a guarantee is given the City will find the finance, from the stage of accept- 213 ance of the goods, without recourse to the manufacturer himself. For the time being a limit of up to 85 per cent, of the credit given to the overseas buyer, instead of the 90 per cent, usually available under an ordinary Export Credits Guarantee Department policy, will be set in those cases where this procedure is used. We shall review this in the light of developments, and meanwhile I hope the arrangement will help our exporters at an important point.
§ But any initiative of this kind which the Government can take can only support and reinforce the efforts which industry itself must make to increase output and to capture foreign markets. And here industry must combine enterprise with restraint. It must be enterprising in the vigour and imagination with which it meets the challenge of sharpening competition; it must be restrained in the extent to which it loads the final price by its demands for wages and profits. We are near the point—and in some cases we may have passed it—where further increases in wages and profit margins will price us out of our export markets. All-round increases in wages have clearly played a large part in the upward movement of prices since 1945. Both stability at home and competitive power abroad require that wage increases should not outrun productivity; any improvement in productivity should show itself also in the form of lower prices.
§ But, for the reasons which I have often given, industry must also beware of excessive distribution of profits. In all these questions we do better to rely on voluntary moderation than on any form of compulsory limitation. But at no level of the industrial process can we afford either denial of personal effort or indulgence of personal motives, if, in the sharply competitive world which we now face, our exports are to maintain and to expand their share of world trade.