HC Deb 09 July 1985 vol 82 cc384-5W
Mr. Best

asked the Chancellor of the Exchequer (1) if he will give, for each of the years for which figures are available since 1979, the amount of inward investment into the United Kingdom from abroad, expressed as a percentage of the national investment portfolio;

(2) if he has any evidence of a correlation between the absence of exchange controls and the level and trend of investment in the United Kingdom; and if he will make a statement;

(3) what information he has as to the percentage of the national investment portfolio which has been invested abroad for each of the years for which figures are available since 1979.

Mr. Peter Rees

It is difficult to quantify the effect of the abolition of exchange controls in 1979 on domestic investment, since that depends on an assessment of what might have happened had the controls remained in force. There is no reason to believe that abolition was harmful to domestic investment and it could well have been beneficial, exerting downward pressure on the exchange rate and upward pressure on profitability in the traded goods sector, possibly thereby contributing to the record level of fixed investment in 1984.

The main effect, however, is likely to have been on the form of overseas investment. The increase in the net overseas assets of the non-bank private sector, up £81 billion between 1979 and 1984, owes much to investors' ability to choose to invest in appreciating assets.

There is no one definition of the "national investment portfolio". The following table expresses the stock of overseas financial assets and liabilities held by the non-bank private sector in each year since 1979 as a percentage of the total financial assets and liabilities of the United Kingdom non-bank private sector.

Non-bank private sector
Overseas financial assets as percentage of total financial assets Overseas financial liabilities as percentage of total financial liabilities
1979 24.9 28.9
1980 25.1 28.6
1981 27.8 27.3
1982 30.3 25.6
1983 32.2 24.3
1984 35.2 22.6

Source: CSO Financial Statistics June 1985 Table 14.1.