HC Deb 12 July 1976 vol 915 cc22-4
21. Mr. Litterick

asked the Secretary of State for Trade what steps he proposes to take to rectify the persistent United Kingdom balance of trade deficit with West Germany.

Mr. Meacher

Government-supported export services are already doing a great deal to assist the efforts of United Kingdom exporters in the German market, with encouraging results.

Mr. Litterick

Is my hon. Friend aware that the German-British deficit is the largest single component in the huge trading deficit between the United Kingdom and the Common Market? Since this huge deficit is caused mainly by the importation of manufactured goods, it would seem that our trading relations with Western Germany will be an excellent case on which to apply selective import controls as soon as possible.

Mr. Meacher

The answer to the first part of the question is "Yes". There has, however, been some improvement in the position inasmuch as the United Kingdom's deficit with the EEC in the first quarter of this year, at £392 million, while certainly a large figure, was the lowest since 1973. But the question of application of selective import controls is one that the Government are perfectly prepared to consider. They have imposed such selective import controls in respect of a number of industrial products, but I doubt whether that is the answer to the problem in respect of the West German market, where it is much more the case that we have lost a certain amount of competitive edge across a wide range of semi-finished and finished manufactures.

Mr. Tim Renton

The Minister has just referred to a loss of competitive edge. Could that be due to excessive tax burdens in this country compared with those in West Germany?

Mr. Meacher


Mr. Arthur Lewis

If my hon. Friend cannot agree with that, to what extent might it possibly be due to the high costs we are having to bear through having our troops in Germany? Is it not about time that the Germans paid their full share of those costs?

Mr. Meacher

That is an interesting suggestion, but I doubt whether it affects our competitive edge in industry.

Mr. Peter Bottomley

Is there any natural reason why we should have lost our competitive edge with Germany? if there is any such reason, will the hon. Gentleman explain how selective import controls would cure that?

Mr. Meacher

One of the fundamental problems of our industry is undoubtedly the chronically low level of investment. The level of manufacturing investment in this country today is, in real terms, about where it was in 1967–68, whereas our EEC competitors, notably Germany, have seen a constant annual real increase. This is a fundamental problem and it may well be justification for selective import controls in particular cases.

Mr. Shersby

Does the hon. Gentleman think that the level of investment has nothing to do with the level of taxation?

Mr. Meacher

The level of investment is affected by the level of taxation, but it is affected by several other factors. We have to take into account the totality of factors. If there is no other way of promoting the level of investment that we need, we must proceed by way of public mechanism such as the NEB or by other means such as import controls.