HC Deb 17 January 1974 vol 867 cc900-1
8. Mr. Strang

asked the Chancellor of the Exchequer if he will make a further statement on the steps he is taking to improve Great Britain's balance of payments.

The Paymaster-General (Mr. Maurice Macmillan)

I have nothing to add to my right hon. Friend's statement on the economic situation on 17th December. My right hon. Friend made it clear then that he would not hesitate to take any further action which may be required in the national interest.

Mr. Strang

Do the Government dispute the statement made earlier this week by the Governor of the Bank of England, who said that prior to the increase in oil prices at the time of the Middle East War our balance of payments deficit was running at an annual rate of £2,500 million? Is it not abundantly clear that, no matter what international measures may be taken to obviate the difficulties created by the increased oil prices, Britain will be required to take specific further measures to correct our balance of payments?

Mr. Macmillan

In making his statement to the House my right hon. Friend made it plain that there was a balance of payments problem before the oil situation developed. He said that there was a considerable deficit and added that there was at that time reason to believe that, as the effect of the depreciation of sterling worked through the balance of payments, the deficit would begin to improve. That was the case.

Mr. Body

Will my right hon. Friend give the latest estimate of the deficit on our balance of trade with the rest of the Common Market?

Mr. Macmillan

If my hon. Friend will put down a specific Question for those figures I shall give them to him, but I do not have them now. What the House and the country must accept is that, in common with the other countries of Europe, we are facing a major problem in the world where the cost of energy is high. The position of the United Kingdom, provided that the coal comes forward, is more favourable that that of other European countries.

Mr. Healey

Will the right hon. Gentleman say what is the estimated cost to the country of the revised Basle agreements assuming the current dollar value of the pound? How does he propose to finance the enormous current balance of payments deficit during the coming year? Has the Chancellor approached the International Monetary Fund for a loan?

Mr. Macmillan

My right hon. Friend the Chancellor made it clear some months ago that he might, if necessary, approach the International Monetary Fund. I think it was the occasion of his Mansion House speech. He also made clear in the course of his statement to the House in December that he would consider any methods which were necessary in the national interest to help finance the balance of payments. It is also clear that the oil-importing countries, including the United Kingdom, will have a massive problem of financing the balance of payments deficit to the Arab countries. The Basle figures will not be available until the end of the month.