§ 7. Mr. Newensasked the Chancellor of the Exchequer what regular meetings take place between Ministers in his Department and Ministers in the United States Treasury; and in what context they occur.
§ Sir Geoffrey HoweI meet my American opposite number at the regular meetings in the OECD, the IMF and the World Bank; and at the annual economic summits. We also meet on an ad hoc basis from time to time.
§ Mr. NewensWhat representations has the right hon. and learned Gentleman made at those meetings against the disastrous effects of President Reagan's monetarist madness, high interest rates and now the President's ban on the take-up of contracts for the German-Soviet pipeline? Does he agree that those factors bode ill for economic recovery in Europe, especially in Britain, which is afflicted by the same madness?
§ Sir Geoffrey HoweContracts for the Soviet pipeline are a separate issue. It is appropriate to put further questions about it to my right hon. Friend the Secretary of State for Trade. With regard to American economic policies, it is important that the American Administration should succeed in their battle against inflation. Firm control of monetary growth, there as here, is an essential part of that. However, it must be supported, there as here, by firm and effective control of the Budget deficit. It is ironic that the hon. Gentleman, who belongs to the party that frequently urges me to expand the Budget deficit in Britain, acknowledges the consequence of a Budget deficit in the United States—that it is too high and that it is one of the main causes of high American interest rates.
§ Mr. BudgenWhen my right hon. and learned Friend meets his colleagues abroad, does he explain to them, as he sometimes does not explain to us, whether he is now controlling the prospective rate of inflation by reference to the money supply or by reference to the sterling exchange rate?
§ Sir Geoffrey HoweAs I have said often, the Government have no covert or overt target for the sterling exchange rate. Our policies are determined by attention to the rate of monetary growth, exactly as I explained in my last Budget Statement.
§ Mr. ShoreWe agree that the United States, as well as other industrial countries, is suffering, to a greater or lesser extent, from many of the problems that face Britain—especially unemployment and the lack of adequate industrial growth. Is the right hon. and learned Gentleman satisfied that the forums in which the principal countries of the Western world discuss matters of major and mutual interest are adequate? Does he agree that the summit of the Seven could be reinforced, in spite of the incredibly disappointing series of recent meetings, including the Versailles summit? Does he agree that that could be done by having meetings of Finance Ministers before the summits take place?
§ Sir Geoffrey HoweI take the importance of the right hon. Gentleman's point. It is important that Britain should play an important part in international discussions of that type. The summit of the Seven at Versailles addressed itself to that point. As a result of it, discussions are now taking place on those international matters. They follow up a suggestion that I made in a speech to the IMF last year. Perhaps I might respond to the right hon. Gentleman's question by asking him another—[HON. MEMBERS: "No".] Does he believe that the Budget deficits that are high and rising in the United States are to be deplored, but that those in Britain should not be?