§ Mr. Dell
At their meeting on 15th July the Finance Ministers of the EEC discussed the economic situation in the member countries and the counter-inflationary measures already taken or to be taken. The purpose of the discussion was to enable individual countries to pursue compatible economic policies. Ministers, therefore, had an exchange of views on, in particular, measures to be taken to control inflationary tendencies, to moderate expectations and gradually to restore external equilibrium.
For those countries with a high rate of inflation and a balance of payments deficit this would involve the avoidance of excessive domestic demand and a reduction in their deficit; and for countries with under-utilised resources and a 229W balance of payments surplus, the maintenance or increase of domestic demand and a reduction in their surplus, whilst avoiding new price increases.
§ Mr. Skinner
asked the Chancellor of the Exchequer (1) what part he considers wages play in causing inflation;
(2) what part he estimates insufficient investment in productive plant plays in causing inflation.
§ Mr. Dell
Wage increases are not necessarily a principal cause of price increases, and a high level of investment is a vital means of securing the productivity gains which permit substantial improvements in wages without adding to prices. But in the short term the scope for rapid improvements in productivity is obviously limited, and, now that the rate of increase in commodity prices is moderating, what happens to wages will be the key to controlling inflation in the period immediately ahead.