Balance of Trade (Hansard, 26 April 1976)

§ 5. Mr. Canavan
asked the Secretary of State for Trade what is the latest available figure for the United Kingdom balance of trade.

§ 25. Mr. Neubert
asked the Secretary of State for Trade what is the present deficit on the balance of trade ; and if he will make a statement.

§ The Secretary of State for Trade (Mr. Edmund Dell)
The early part of this year has seen a continuation of the reduction in our visible trade deficit which took place in 1975. In the first quarter, our visible trade deficit was £438 million seasonally adjusted, the lowest quarterly figure since before the quadrupling of oil prices at the end of 1973. Trade in non-oil goods was in surplus by £518 million in the same period, the highest figure recorded since 1970.

§ Mr. Canavan
Is it possible to estimate the balance of trade figures for various parts of the United Kingdom? If there any evidence to substantiate the SNP claim that a separate Scotland, even now, would have a healthy balance of trade surplus, or is that another typical example of the lies which the SNP is spreading to try to stir up discontent among the people of Scotland?

§ Mr. Dell
I gave some figures in my recent speech during the devolution debate, which I followed up with a Written Answer towards the end of January, from which it can be seen that, so far as the balance of trade of Scotland can be determined, there is at present a very substantial Scottish balance of trade deficit.

§ Mr. Neubert
I welcome the encouraging figures for last month, but does the Minister agree that there were freak factors at work, such as exceptionally large re-exports of diamonds? What is the latest forecast of the deficit for the full year?

§ Mr. Dell
I agree that the March figures, unfortunately, cannot be expected to be typical as exceptional factors were involved. Nevertheless, with our exports increasing and some expansion of world trade taking place, I hope that this year we shall do better on our balance of trade than we did last year.

§ Mr. Higgins
I congratulate the Secretary of State on his promotion and wish him well in his high office. Will he explain why the Government have been playing with interest rates rather like a yo-yo? Is not this bound to have a destabilising effect on the exchange rate, and is it not accordingly likely to produce very uncertain balance of payments figures for the remainder of this year?

§ Mr. Dell
I am grateful to the hon. Gentleman for his congratulations. The level of interest rates is a question for my right hon. Friend the Chancellor of the Exchequer. I understand that there is to be a Private Notice Question on the £sterling which will no doubt give the hon. Gentleman an opportunity to ask his supplementary question.

Mr. loan Evans
I congratulate my right hon. Friend on his new appointment. Will he encourage industry to purchase from British component industries 7 so as to reduce imports, and will he encourage consumers to buy British to secure an improvement in our trade figures?

§ Mr. Dell
Several discussions have been going on, for example, between manufacturers and the retail industry, which I hope will lead to the sort of results which my hon. Friend wishes to see. It is important that British industry should be competitive.

§ Mr. Pardoe
May I welcome the right hon. Gentleman to his new post by asking him in future not to mention the non-oil deficit? Does he accept that it would be just as reasonable—or unreasonable—to talk about the non-food deficit? Is not the food deficit just as important and as large as the oil deficit, and what is the Department doing to close that gap?

§ Mr. Dell
I agree that there is a certain inappropriateness in referring to the non-oil deficit. It has been customary to give that figure, but I shall certainly consider the hon. Gentleman's representation. As to what we are doing about the food deficit, a White Paper was published recently, but these are questions for my right hon. Friend the Minister of Agriculture, Fisheries and Food.

§ 21. Mr. Marten
asked the Secretary of State for Trade what is now the total trade deficit with the Common Market countries since Great Britain joined in January 1973.

§ Mr. Dell
The United Kingdom's visible trade deficit with the EEC, on a balance of payments basis, in 1973, 1974 and 1975 taken together was £5,547 million.

§ Mr. Marten
While recognising what a great disappointment these figures must be to those who thought that a wider European Market would be beneficial to our trading position, may I ask how much longer we can go on with this rising trend in our trading deficit with the Community? Can we expect anything to come out of the meeting of Finance Ministers in Luxembourg?

§ Mr. Dell
I am glad to say that in the first quarter of this year there was some improvement in the position. We obviously have a long way to go. This 8 is another aspect of the competitiveness of British industry which must improve.

Mr. Heller
As during the referendum campaign we were informed of the great economic advantages that would flow from our remaining in the Common Market, may I ask my right hon. Friend to tell the House precisely what we have gained economically by remaining in the Common Market?

§ Mr. Dell
I certainly do not remember saying at any time during the referendum campaign that there would be as rapid an improvement in our prospects as my hon. Friend seems to have expected. Many of those who opposed British membership did so on the basis of wider free trading policies. Here we have free trade with Europe and now we have the opportunity to benefit from it.

§ Mr. Jessel
How do the Government expect the large deficit with the Community to be affected by the drop of one-tenth in the value of the pound in the past two months?

§ Mr. Dell
The Government's attitude to the drop in the value of the pound has been made clear by my right hon. Friend the Chancellor of the Exchequer on more than one occasion. Price is only one aspect of competitiveness. In this country we need to compare our record with that of countries with appreciating currencies, countries which, nevertheless, have achieved continuing balance of payments surpluses.

§ Mr. Jay
Can my right hon. Friend say how the figure of over £5,000 million compares with this country's total overseas borrowing during the same period?

§ Mr. Dell
I cannot do so, without notice. If I add up all the balance of payments deficits of the country as a whole during that period, it is a substantial part of it. Nevertheless, as my right hon. Friend knows, there has been considerable switching of trade since we entered the European Community, and that has affected the situation.

§ Mr. Blaker
Does the right hon. Gentleman think that our total trade deficit with the world since the beginning of 1973 would have been any less if we had been outside the Common Market, and, if so, why?

§ Mr. Dell
Analyses of this matter by independent organisations have shown that our membership in this respect has, as yet, made no difference to the economic results.