§ Mr. Deakinsasked the Chancellor of the Exchequer what is the nature of the causal relationship between a balance of payments surplus on the oil account and a balance of payments deficit on trade in manufactured goods.
§ Mr. Peter ReesBecause the overall balance of payments—current and capital accounts—sums to zero, a surplus on oil account will be associaed with a corresponding deficit on the rest of the current account unless there is a higher surplus on the total current account. One mechanism by which such a change in the structure of the current account occurs is through a change in the real exchange rate.