§ Mr. Marten
asked the Chancellor of the Exchequer to what he attributes the decline in the United Kingdom invisible earnings from £374 million surplus to £160 million deficit over the past four years in business with the EEC; and if he will give a breakdown.
§ Mr. Robert Sheldon
The decline in net invisible earnings on transactions with the EEC was mainly the result of an increase in the deficit on general Government services, a decline in the surplus on interest, profits and dividends, and an increase in the deficit on general Government transfers. Offsetting these to some extent was an increase in net earnings on financial services, on travel and on civil aviation.
The increase on the deficit on general Government services was largely the effect of inflation on defence expenditure in Germany. The decline in the surplus on interest, profits and dividends was the result of several changes: public sector borrowing from the European institutions increased over the period, and hence the interest payments to these bodies increased private sterling balances held by EEC residents also increased over the period, and lead to increased interest payments to the EEC. The increase in the deficit on general Government transfers was the result of increased net contributions to the EEC institutions.522W
Kingdom compared with West Germany. Belgium, Holland, Luxembourg, Switzerland, Denmark, France, the United States of America and Japan respectively, using the same method of analysis.
§ Mr. Joel Barnett
The best basis of comparison is provided by OECD measures of increases in consumer prices. These indicate the following:
A breakdown of the figures is given in Table 13.1 of the CSO publication "The United Kingdom Balance of Payments 1966–1976."