CITY OF LONDON (Hansard, 26 October 1976)

§ Q3. Mr. Ridley
asked the Prime Minister if he will pay an official visit to the City of London.

§ The Prime Minister
I refer the hon. Member to the reply which I gave to my 272 hon. Friend the Member for Thornaby (Mr. Wrigglesworth) on 19th October.

§ Mr. Ridley
Will the Prime Minister go to the City and explain what he meant when he said that IMF policies would cause the British economy to go into a downward spiral? Is it not correct that it is his policies and those of Socialism that have put the British economy into the present downward spiral? Will the Prime Minister do something to cut public expenditure and save the country's currency instead of trying to bite the hand that feeds it?

§ The Prime Minister
We have applied to the IMF for a loan. All sorts of stories are coming from apparently well-informed journalists but we have not yet begun discussions with the IMF.

§ Mr. Hugh Fraser
Why not?

§ The Prime Minister
We shall have to see what conditions it puts forward at the appropriate time.
As to cutting public expenditure and growth, I am sure that the hon. Gentleman will agree that we should go for a period of sustainable growth, and therefore it would not be right to accept conditions on such a loan that would prevent us from going for that sustainable growth.

§ Mr. Ashton
Does my right hon. Friend remember that on 11th March the Government took notice of the Opposition and cut £1 billion off public expenditure and the pound fell? Then, in July, they cut £2 billion off and the pound fell even more. Does he not think that he could save £600 million by pulling the troops out of Germany? That would be warmly welcomed by the Labour Party, Labour Members and the people of the country.

§ The Prime Minister
I do not think that my hon. Friend's figures for March and July are correct, but it is true that the cuts in public expenditure have not, as the Opposition said they would, had the effect of restoring confidence in sterling. [HON. MEMBERS: "They are not enough."] I see that hon. Members think that they are not enough. In that case it would be as well if we could have a straight answer from the Opposition about how much they really think would be enough.

§ Mr. Baker
Three weeks ago Helmut Schmidt said that the pound was undervalued. Why is it that in the past three weeks the Federal Government of Germany and the Bundesbank have not bought pounds since this would have driven up the price of sterling? Is it that Helmut Schmidt has decided that he no longer has confidence in the Prime Minister and his policies?

§ The Prime Minister
The hon. Gentleman knows better than that. The Federal Republic is in the fortunate position of not having a reserve currency and it will do its best to prevent itself from becoming a reserve currency country. Our situation is a relic of the sterling area days and it is a burden that we bear. The hon. Gentleman knows that the monetary policy of the Bundesbank is not a question for me.