77. Mr. Lee
asked the Chancellor of the Exchequer what estimate he has formed of the present tendencies in the movement of world prices and the effect of such movement upon our balance of payments.
§ Mr. R. A. Butler
The U.K. terms of trade deteriorated during the second half of 1954 and in January, 1955, were about 6 per cent. worse than a year earlier, chiefly owing to increases in the prices of tea, rubber, non-ferrous metals and freight rates. This change in the terms of trade has naturally affected our balance of payments position adversely, but it is to be remembered that an adverse move in the United Kingdom terms of trade does not necessarily lead to a deterioration in the balance of payments of the sterling area as a whole.