HC Deb 25 June 1968 vol 767 cc230-4
26. Mr. Dickens

asked the Chancellor of the Exchequer if he will make a forecast on the balance of payments position in the second half of 1968.

Mr. Roy Jenkins

I do not wish at this stage to add to what I said on this subject in my Budget speech.

Since then imports have continued at a rather high level, though this seems to have received some check recently. Exports have come well up to my expectations. Our net invisible earnings have done well. The first quarter saw some exceptional investment transactions but these will not affect the prospects for the rest of the year.—[Vol. 761, c. 253–8.]

Mr. Dickens

Does my right hon. Friend accept the National Institute's forecast of a deficit of about £200 million on current account in the second half of 1968, and will he look again at the question of reintroducing import controls to reduce the amount of manufactured and semi-manufactured goods coming to this country, especially since devaluation?

Mr. Jenkins

I always take note with interest and attention of the National Institute's forecasts. I do not necessarily accept them. I note that the Institute itself said that it was little if any more certain than those which they made last time, in other words, three months before, which forecast an entirely different outturn. I take note of them, but I do not necessarily accept them. I have nothing to add to what I have said on previous occasions about import controls.

Mr. Macleod

If the Chancellor is now relying on his main forecast for exports rather than the higher forecast, which I understood from his reply to an earlier question, and if imports are much higher than he expected—as we know they are— how can he possibly maintain that his forecast can work out for the second half of this year?

Mr. Jenkins

The right hon. Gentleman is not correct in assuming that I am necessarily relying on my main forecast. What I said to the hon. Member for Worthing (Mr. Higgins) was that I thought the position looked at least as good as the main forecast. It may turn out to be better, but there is no doubt that the high level at which our imports have run is higher than we would have hoped. This means that at any rate for the first half of the year the out-turn cannot be as satisfactory as we would have hoped, but I have nothing further to say about the second half of the year, and still less about 1969, for which I still believe we have every prospect of earning a very good surplus indeed.

30. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer whether it is still his estimate that the United Kingdom will achieve a balance of payments surplus in the second half of 1968, and a surplus of £500 million in 1969.

42. Sir C. Osborne

asked the Chancellor of the Exchequer if his estimate that the balance of payments deficit will be eliminated by the end of 1968 still holds good; and what deficit he now expects for the current year.

Mr. Roy Jenkins

I have nothing at this stage to add to what I said on this subject in my Budget speech and in my Answer to a Question from my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) earlier this afternoon.

Mr. Bruce-Gardyne

Does a very good surplus for next year mean more or less than £500 million? Is it not clear that we are heading for another massive deficit this year? Is the right hon. Gentleman satisfied that our overseas creditors are prepared to put up yet again with hope deferred from this Government?

Mr. Jenkins

I am satisfied that we are on the right lines and that it is essential to continue this strategy. I believe that we can achieve a surplus in the fairly near future, and a very good surplus, of the biggest size possible. Anyone is extremely foolish who thinks that he can predict this accurately within £50 million or £100 million, but a sizeable, very big surplus for 1969 must and will remain the main objective of our policy.

Sir C. Osborne

How can this course be justified and give the right hon. Gentleman satisfaction when again the Economist has calculated that we are running at present at a deficit of £1,300 million a year? How on earth can we have a surplus in the second half?

Mr. Jenkins

It was clearly understood that there would be a deficit in the first half, but we hoped to counteract this in the second half and then move into substantial surplus.

Mr. Frank Allaun

Would not a large part of the deficit be overcome if the Government ended their net overseas military spending across the exchanges of £232 million a year?

Mr. Jenkins

My right hon. Friend will be aware that, in January, we took measures, which admittedly will take some time to work out, substantially to reduce our overseas military commitments and the burden which we carry in that respect for the first time since the war, to bring it into line with that of our main competitors in Europe.

Mr. Iain Macleod

Can the right hon. Gentleman give us a clear answer to this question, which he has ducked at least half a dozen times this afternoon? In his Budget statement, he said—I think that these were his words—that he "hoped and expected" a surplus in the second half of 1968 and a surplus of £500 million as soon as possible. Does he hold to that or not?

Mr. Jenkins

I said a surplus "of the order of £500 million", and I certainly hold to that as being an objective to which we must work as quickly as we can. I have every intention of continuing to make this a central objective of my policy, as, I believe, any Chancellor should.

Mr. Michael Foot

In view of my right hon. Friend's renewed assertion about achieving this excess on our balance of payments, does he agree with the statements made by his colleagues in recent days that the projected reduction in our expenditure east of Suez will enable us to increase our expenditure in Europe? Does he not think that this policy must be earnestly reviewed so that we continue to reduce our expenditure in Europe as well as east of Suez?

Mr. Jenkins

This raises very much wider issues, but it is certainly my view, as we have said and as my right hon. Friend the Prime Minister said in January, that it is necessary for us to bring our overseas military commitment as a whole into line with what we can afford.

Mr. Iain Macleod

The right hon. Gentleman has evaded the question once more. Does he or does he not, in his own words, "hope and expect" for a surplus in the second half of this year?

Mr. Jenkins

I certainly hope that we may achieve it in the second half of this year. Clearly, no one can predict this with certainty, and I have nothing firmly to add to the forecast which I gave in the Budget. It does not, from any point of view, encourage the publishing of detailed forecasts if one is tempted to adjust them from week to week or from month to month.