§ 5. Mr. Roperasked the Chancellor of the Exchequer which member countries of the Organisation for Economic Co-operation and Development had bank rates, or equivalent rates, higher than the United Kingdom in May, 1970; and how many had higher rates on 1st January, 1971, from information available from international sources.
§ Mr. BarberI will, with permission, circulate a table which gives this information. Absolute levels of Bank Rate or its equivalent are not good guides to the actual cost of commercial borrowing in different countries. Costs to good borrowers in this country are lower than the O.E.C.D. average.
§ Mr. RoperWhile thanking the right hon. Gentleman for that reply, does not it suggest that there is now no argument on the basis of the international position of sterling for keeping interest rates at a level which discourages industrial investment and house building, so giving another twist to the inflationary spiral?
§ Mr. BarberObviously it is not the practice of Chancellors of the Exchequer to discuss interest rates or to forecast their future in the House. Costs to good borrowers in this country are lower than the O.E.C.D. average. The hon. Gentleman should consider the table.
§ Mr. TaverneOn Bank Rate, will not the table show how ill-founded and insincere were the continual criticisms of right hon. and hon. Gentlemen opposite during the period of office of the previous Government, when they complained about Bank Rate being high when it was relatively low or average, whereas they now defend it when it is high in comparison with other countries? On the point asked by my hon. Friend the Member for Dudley (Dr. Gilbert), when Bank Rate reflects a situation which is attracting "hot" money, what policy will the 297 right hon. Gentleman pursue to prevent an influx of this undesirable money?
§ Mr. BarberAs the hon. and learned Gentleman knows, certain action was taken and announced by the Bank of England a short time ago in connection with British companies borrowing abroad for domestic use. As for Bank
| INTEREST RATES IN O.E.C.D. COUNTRIES | ||||
| Bank rate | Prime lending rate | |||
| Country | End May, 1970 | 31st December, 1970 or latest convenient date | End May, 1970 | 31st December, 1970 or latest convenient date |
| Austria | 5 | 5 | n.a. | n.a. |
| Belgium and Luxemburg | 7½ | 6½ | 9½ | 8½ |
| Canada | 7½ | 6 | 8½ | 7 |
| Denmark | 9 | 8 | 9½–11½ | 8½–10½ |
| Finland | 7 | 7 | 7½ | 7½ |
| France | 8 | 6½ | 8⅝–13⅛ | 7⅛–11⅝ |
| West Germany | 7½ | 6 | 11¾–12¼ | 9¾–10¾ |
| Greece | 6½ | 6½ | 8 | 8 |
| Iceland | 5¼ | 5¼ | n.a. | n.a. |
| Ireland | 7 5/16 | 7¼ | 9½ | 9½ |
| Italy | 5½–7 | 5½–7 | 9¾ | 9¾ |
| Japan | 6¼ | 5¾ | 7¼ | 6¾ |
| Netherlands | 6 | 6 | 9.3 | 9.3 |
| Norway | 4½ | 4½ | n.a. | n.a. |
| Portugal | 3½ | 3½ | 5¼ | 5¼ |
| Spain | 6½ | 6¼ | 8 | 8 |
| Sweden | 7 | 7 | 9¾ | 9¾ |
| Switzerland | 3¾ | 3¾ | 7 | 7 |
| Turkey | 7½ | 9 | n.a. | n.a. |
| United States | 6 | 5 | 10* | 7½* |
| United Kingdom | 7 | 7 | 8 | 8 |
| Sources: The figures of prime lending rates for Greece and Ireland are from national sources. The others are Bank of England estimates based on the figures in the O.E.C.D. Financial Statistics Bulletin, and subject to the qualifications in that bulletin. | ||||
| * The basic prime rates have been increased to take account of the redeposit requirements which raise the effective rate of interest. |