§ Mr. Deakinsasked the Chancellor of the Exchequer why he uses the term negative external financing limits in the context of the nationlised industries; and what is its economic rationale.
§ Mr. Peter ReesAn industry's external financing requirement is the difference between its capital requirements and its internal resources. It is similar in concept to sources and applications of funds statements in company accounts which are intended to show net cash flows to and from a company. Where an industry is generating a positive cash flow, ie internal resources exceed capital requirements, the external financing requirements will be negative. External Financing Limits (EFLs) are control limits and have been set by successive Government as a basis for monitoring industries' financing requirements and regulating flows of finance to and from an industry.