HC Deb 15 June 1961 vol 642 cc620-1
17. Mr. Ginsburg

asked the Chancellor of the Exchequer how the change in the gold and dollar reserves, for the period 1st March to 31st May, 1961, compares with the changes for the similar period in 1960 and 1959, respectively and whether he will make a statement.

Mr. Barber

The gold and convertible currency reserves fell by £104 million during the period 1st March to 31st May, 1961; they rose by £49 million in the same period of 1960, and fell by £13 million in the same period of 1959. The fall in the reserves in 1961 is partly due to the present adverse underlying balance of payments, and partly to the withdrawal of short-term funds from London.

Mr. Ginsburg

Is not the Economic Secretary aware that this is an extremely serious decline at a time when the pound should be seasonally strong? Does it not reflect a very serious lack of foreign confidence clue to the complete failure of the Government's present export policy?

Mr. Barber

The Government have never concealed their view that our present balance of payments situation is most unsatisfactory, and my right hon. and learned Friend explained the way in which he proposed to deal with it in his Budget speech. I would merely add this for the hon. Gentleman's benefit. Changes in the reserves do not by themselves necessarily provide a reliable indication of the underlying balance of payments position in the United Kingdom because they are influenced by other monetary movements. For example, during 1960, the reserves rose in each month of the year, except January, and by a total of £177 million, even though 1960 was a year when there was a large balance of payments deficit.

Mr. H. Wilson

Do not these figures, grave though they are, very much understate the position in the five months in question in that this new system has been introduced of European central banks holding sterling? If it were not for that, would there not be a very much heavier drain on our reserves? Could not the hon. Gentleman put a figure on that item?

Mr. Barber

I am sure the right hon Gentleman knows that it would be contrary to public policy to disclose details of the transactions under the Exchange Equalisation Account. Clearly, the United Kingdom's reserves have been supported by the assistance given to us by other central banks, but I cannot reveal the size of the transactions.