Exchange Controls (Hansard, 18 July 1979)

§ Sir Geoffrey Howe

In my Budget Statement I announced my intention to take further steps, as circumstances allowed, in the progressive dismantling of exchange control. I have decided to allow complete freedom of choice in the financing of outward direct investment, and to take three significant steps towards liberalising outward portfolio investment.

With effect from tomorrow, 19 July, official exchange will be available without limit for all outward direct investments, and foreign currency borrowing taken at any time to finance such investments will be eligible for repayment with official exchange. As regards portfolio investment, also with effect from tomorrow official exchange will be available for investment by United Kingdom residents in most securities denominated and payable solely in the currencies of other EEC countries.

Secondly, official exchange will also be available for investment in foreign currency securities issued by international organisations of which the United Kingdom is a member, including those issued by European Community institutions and the World Bank. One of the consequences will be that the sale proceeds of existing new holdings of such securities, however acquired, will no longer be eligible for sale in the investment currency market.

Thirdly, foreign currency borrowing taken by United Kingdom residents to finance outward portfolio investment and which has been outstanding at least one year as of tomorrow will be repayable with official exchange. As in the case of last month's measure, I have discussed these changes with the Commission of the European Communities.

Further details are available in the Vote Office.