§ 1. Mr. Jayasked the Chancellor of the Exchequer whether, in order to achieve lower interest rates, he will now reintroduce exchange control.
§ The Minister of State, Treasury (Mr. Peter Rees)No, Sir. Exchange controls were an unnecessary administrative burden on the economy and we have no intention of reintroducing them.
§ Mr. JayIs it not now perfectly clear that the abandonment of exchange control was a reckless blunder that destroyed the chance of lower interest rates and is doing further major damage to British industry?
§ Mr. ReesNo, Sir. This was a highly considered move and it has been generally beneficial in its effects. It has only a marginal, if any, effect on interest rates.
§ Sir William ClarkDoes my hon. and learned Friend agree that this country enjoys some of the lowest interest rates in Europe, and certainly below those prevailing in the United States? Does he further agree that if the Government were to indulge in massive reflation, albeit uncosted, this would mean a possible doubling, if not more, of the public sector borrowing requirement, which would lead to higher interest rates, burdens on industry, higher unemployment and higher mortgage payments?
§ Mr. ShoreWas not the whole rationale behind the Budget to bring down interest rates and, in order to achieve it, was not a large fiscal deflation announced? What is the hon. and learned Gentleman's response now that interest rates are moving up? Can we look forward to further cuts in public expenditure and to increased taxation in order to keep interest rates at their present 12 per cent. level?
§ Mr. ReesThe right hon. Gentleman should await my right hon. and learned Friend's next Budget, which will be next spring.