§ It is not enough for us to earn abroad sufficient merely to meet the cost of our imports. We have also to repay our debts; and we have to resume our traditional position as the main supplier of capital for the development of the Commonwealth and Colonial Empire, which offer such inspiring opportunities. We have taken on heavy liabilities to the Colonies under the Colonial Development and Welfare Acts and our participation in the Colombo Plan. We are also making increasing facilities available to Commonwealth Governments in the London market.
§ All these external liabilities add up to a formidable call on our resources. We shall succeed in meeting this call only if we play our full part in establishing two prior conditions. First, we must seek to ensure an expanding volume of world trade in conditions which give our industry every chance to share in it. Secondly, we must be sure that British industry is equipped to take full advantage of this chance by its efficiency and initiative.
§ What are the prospects for an expanding and freer world trade? It may be said that we have been trying to recreate the ideal conditions envisaged by Adam Smith and Cobden; and that to attempt this in a world of selfish and protectionist lobbies is no more than ineffectual idealism. But, in fact, our policies have been open-eyed in their realism. They spring from our conviction that without a system of trade rules and open trade behaviour, applied to our competitors no less than to ourselves, our exports would be exposed to every kind of restriction and retaliation, and our island interests would be submerged.. That is why we have got together with our colleagues in the Commonwealth and our friends in Europe, in the Organisation for European Economic Co-operation, and the U.S.A. in a fresh effort to remove barriers to the free flow of trade and payments.
§ Last year we were concerned about the possible effects of a recession in America.52
§ But I am glad to say that the Government and people of the U.S.A. did much to stem the threatened decline in their output; and now there is an upsurge of renewed confidence and re-invigorated production in that country. This general revival of industrial activity in the U.S.A. should benefit not only America herself but also the rest of the free world—the more so if President Eisenhower's fresh initiative in developing more liberal trade policies commands the support of all men of good will.
§ In Western Europe trade and production are still rising, and it was largely due to that recovery that we got through last year so well. It has been a great satisfaction to me, as Chairman of the Organisation for European Economic Co-operation, to watch, applaud and encourage this expansion in Europe—an expansion which is reflected in the current plans for further removal of restrictions on trade this year.
§ The Committee will wish to study the White Paper which will be published this evening outlining the Government's policy towards the changes in the G.A.T.T.—the General Agreement on Tariffs and Trade—recently negotiated in Geneva; but I can say now that the G.A.T.T. emerges from this review as an instrument better adapted to reinforce our efforts to liberate trade. The instrument is there to our hand; it is for the member countries to use it.
§ Looking outwards, some of our export markets may be difficult—in Australia, for example, where our friends have recently announced reductions in their imports in the interests of the sterling area's balance of payments and of their own. But, in general, there are good prospects that world markets will offer us substantial opportunities to increase our exports this year. But we shall not achieve this essential increase unless our goods stand up to competition, particularly from the U.S.A., Germany and Japan.
§ If we are to be competitive, above all in price, we must combine a policy of incentive and expansion with continued restraint in the demands which we make on that expansion for our own personal satisfaction. I must warn the Committee that between 1953 and 1954 output per man, over the economy as a whole, rose by about 2½ per cent.; but the increase in wage rates was over 4 per cent.53
§ Clearly, if this tendency continues, prices will be subject to constant upward pressure, and the effects both at home and in export markets will be adverse.
§ We must certainly watch other personal incomes also—for example, dividends. [HON. MEMBERS: "Hear hear."] It would be as well if, before cheering, hon. Members would keep matters in their true perspective. The Committee will have observed from the Economic Survey that personal incomes from rent, interest and dividends rose last year by £60 million or about 4 per cent., while wages and salaries rose by £645 million, or about 7½ per cent.
§ Nevertheless, it remains true that, whatever source of income we consider, any tendency for money incomes to increase faster than productivity must lever up prices, or tilt the balance of payments against us, or both. The country should realise that there is a limit to the additions to our costs and prices which we can afford, if we are to remain competitive with our keen rivals in export markets. So much for looking outwards.