§ 10. Mr. Dodds-Parkerasked the Chancellor of the Exchequer whether he is aware that the dollar premium has now stood for some considerable period at over 20 per cent.; and, in view of the fact that this reflects adversely on the standing of sterling and puts British companies at a disadvantage against their foreign competitors in connection with investments overseas, what steps he intends to take to achieve a reduction in the level of this premium.
§ Mr. CallaghanThe measures in my Budget speech will have the effect of relieving pressure on the investment currency market. This small market has no bearing on the standing of sterling.
§ Mr. Dodds-ParkerWill the right hon. Gentleman look at this again and seek some disinterested advice—there is plenty of it about; and I do not mean Mr. Kaldor? Does he realise that the Prime Minister at the Economic Club in New York gave great praise to and claimed considerable credit for this type of investment, yet this action by the Chancellor is seriously undermining the status of these investments?
§ Mr. CallaghanI do not lack advice. I get it from all quarters, and I read it all and use it whenever it seems to be valuable. I am sure that the present policy is the right one; and it is producing more than £70 million a year, which goes into the reserves.
§ Mr. O'MalleyIs it not likely that the rise in the dollar premium last week arose as a result of the sharp falls on Wall Street and that once the present authorisations have been exercised, the result of the Budget proposals will probably be a fall in the premium?
§ Mr. CallaghanThat may be so. People tend to feel that they are "locked in" a holding when the price of securities falls.
§ Mr. PeytonIs the right hon. Gentleman really saying that the dollar premium does not reflect the views of people in this country on the strength of their currency?
§ Mr. CallaghanThat is exactly what I am saying.