§ 47. Mr. Harold Walker
asked the Chancellor of the Exchequer if he will now make a statement on the effectiveness of the economic measures announced on 20th July, 1966.
§ Mr. Callaghan
Externally sterling has been greatly strengthened. The underlying trend of the gold and convertible currency reserves has been upwards since the autumn, and substantial repayments of earlier drawings on Central Bank facilities have been made. Exports have been advancing strongly and the rapid increase of imports has been checked. The balance of payments as a whole improved greatly in the fourth quarter, and was probably in surplus over the quarter as a whole.
Internally, the measures have eliminated the excess pressure of demand and freed resources for export production and other essential activity. They have also 241W halted the upward spiralling of cost and prices, to the advantage of our competitive position overseas. In the process of redeploying resources some loss of potential output, and a rise in unemployment, has occurred, but these are short-term disadvantages to be set against the gain to the country's long-term prospects for renewed growth on the basis of solvency.