HC Deb 17 February 1970 vol 796 cc190-1
14. Mr. John Fraser

asked the Chancellor of the Exchequer what proposals he now has for reducing interest rates.

Mr. Roy Jenkins

The current level of interest rates is necessary for both external and internal reasons. While I do not propose to keep our rates at a high level any longer than the situation requires I can make no prediction as to when it may prove possible to reduce them.

Mr. Fraser

Following the discussions which my right hon. Friends the Chancellor of the Exchequer and the Prime Minister had with the American Treasury, is there no hope of an agreement on the de-escalation of interest rates in both American and Europe? As a good Socialist, would not my right hon. Friend agree that high interest is a tribute that the poor pay to the rich?

Mr. Jenkins

These matters are a little more complex than that, though I admire my hon. Friend's choice of phraseology. We have been in close contact with the American Government and with other Governments about this matter, and I think that we would all welcome an international decline in interest rates, though I am not sure that a direct attempt at an agreement would be the right approach.

Sir Harmar Nicholls

Is the right hon. Gentleman aware that the squeeze is even more debilitating than high interest rates but that to have both the squeeze and high interest rates is a killer as regards business growth? Cannot he deal with the squeeze, if not with high interest rates?

Mr. Jenkins

I think that the hon. Gentleman is confusing the matter. High interest rates and the squeeze go together.

Mr. Higgins

Are we to understand from the right hon. Gentleman's initial reply that he is deliberately keeping interest rates high for internal reasons, quite apart from the international level?

Mr. Jenkins

No. I have pursued, I think with successful results on the external balance, a policy of monetary stringency. It would not be possible to pursue such a policy with artificially low interest rates.