HC Deb 01 April 1976 vol 908 cc1562-3
13. Mr. Rost

asked the Chancellor of the Exchequer if he will estimate the additional burden of capital repayments on current overseas indebtedness, and extra annual interest charges, which will result from the recent devaluation of sterling.

Mr. Joel Barnett

The total outstanding foreign currency borrowing by Her Majesty's Government and the public sector converted at Exchange rates in force on 4th March was equivalent to £7.8 billion, against £8.1 billion using exchange rates at the close on 23rd March. Much of the borrowing is on floating interest rate terms and the servicing cost cannot be predicted exactly. But, at current interest rates, and using exchange rates in force on 4th and 23rd March, the annual cost of servicing outstanding borrowing would be equivalent to about £450 million and £470 million, respectively.

Mr. Rost

When and how will the Chancellor repay these crippling debts with which the nation has been lumbered by his policies?

Mr. Barnett

He will not be helped by that kind of supplementary question. He will be helped by the policies that we are pursuing, which will ensure that the debts will be reduced. We shall get the economy into balance by continuing the economic policies that we have been pursuing over the past two years—and which we shall pursue for many years to come.

Mr. Trotter

Will the Chief Secretary tell us the reasons for the significant further fall in the value of the pound? Does he put any credence on the view that it might be due to the possibility of the Secretary of State for Employment's becoming the next Prime Minister?

Mr. Barnett

I suppose the answer to that is "Oh, really". The hon. Gentleman will be aware that the reason for the depreciation is that our rate of inflation is higher than is the rate of inflation in other countries. Present policies are bringing down substantially that rate of inflation.

Mr. Nott

Will the Chief Secretary explain what he meant when he said a moment ago that our overseas debts will be reduced? At the moment, the exchange rate is falling and overseas debts are increasing. How will they be reduced, short of repaying them earlier?

Mr. Barnett

One way is by a higher rate of growth of GDP and a lower proportion of GDP being taken for public expenditure.