HC Deb 02 July 1981 vol 7 cc999-1000
11. Mr. Chris Patten

asked the Chancellor of the Exchequer when he next plans to meet the United States Treasury Secretary; and what he proposes to discuss with him.

Sir Geoffrey Howe

I expect to meet him again at the Ottawa summit on 19–20 July. We shall no doubt discuss our own economies and some international issues.

Mr. Patten

Following the recent report of the Bank of International Settlements, when my right hon. and learned Friend meets Mr. Regan will he raise with him the question of American interest rate policy, and particularly the volatility rather than just the level of the rates, since that, after all, is a matter of tactics rather than strategy?

Sir Geoffrey Howe

The volatility of American interest rates has been the subject of some discussion. The monetary control techniques introduced by the American authorities in October 1979 may have led to more interest rate movement, but so, perhaps, have other factors, such as sharp changes in real activity. We hope that as experience with the techniques grows the American authorities will achieve their objectives with less interest rate volatility. It is certainly a matter to be followed up.

Mr. Ioan Evans

Will the Chancellor tell Mr. Regan that the Milton Friedman policies that the Government have pursued are disastrous, and the Americans should not follow suit? Will he also tell him that as, increasingly in Europe, especially with the change of Government in France, interventionist policies are being followed, perhaps Britain and America should consider what Roosevelt did to get America out of the depression?

Sir Geoffrey Howe

The hon. Gentleman would be unwise to draw many conclusions from the change in one Government in Europe. The communiqués of the Organisation for Economic Co-operation and Development and the IMF interim committee, for example, show that the policy of giving the highest priority to the fight against inflation and the securing and maintaining of proper economic control has the authoritative endorsement of both those international bodies. That is in line with our policy.

Mr. Richard Wainwright

When the Chancellor meets President Reagan will he co-ordinate with him plans to restore investment in the Western economy and to expand public demand?

Sir Geoffrey Howe

I aspire directly to negotiate not with President Reagan but with Secretary of State Regan, although no doubt I shall have the opportunity to exchange words with both. In neither case would I wish to endorse the policy of expanding demand and expanding investment for its own sake when, in most economies, and certainly in our own, it is the excess of demand as compared with the performance of the economy that is the cause of our troubles.