Effect Of Entry On U.K.’s Balance Of Payments

Press, Volume CVI, Issue 31363, 8 May 1967, Page 20

Effect Of Entry On U.K.’s Balance Of Payments

(N.Z.P.A.-Reuter —Copyright) LONDON. Britain’s balance of payments might be hit by between £175 million to £250 million a year if it applied the Common Market’s present agricultural arrangements, a Government document says.

The document, which sets out the existing Common Market and British farm policies, was the first in a series to be issued as a follow-up to the British decision to seek Common Market membership. Its estimate of the impact of switching to the Market’s agricultural system was based on calculations that might apply at the end of an unspecified transitional period. It underlined previous estimates that the change , would also mean an increase of between 10 and 14 per cent in the price of food in Britain—equivalent to a rise of some 3 per cent in the over-all cost of living. The blow to Britain’s balance of payments would be largely because Britain would have to pay more for her food imports from Common Market countries, in which prices are often higher than world prices. At present Britain, which imports a large part of its food, buys most of it at world prices. But if she did this when she entered the Common Market, she would have to pay the difference between Common Market and world prices to a European agricultural fund. The document made a number of reservations about its estimates, and emphasised that it was not aimed ,at making any implications about the British position in the forthcoming entry negotiations.'

It gave this estimate of the effects of adopting the Common Market system: Cereals. —British producers of wheat and barley would benefit by higher prices. Beef Cattle. —British beef producers would in general benefit.

Milk.—British milk production would be likely to fall as profitability was cut. Pigs.—Lower profit margins and greater flexibility in returns would lead to British pig production moving into the hands of large-scale specialist producers. Eggs and Poultry.—Profits would be much less and a similar move towards largescale specialist producers would result.

Horticulture.—British producers would suffer from in-

creased competition from Holland, France and Belgium. Sugar Beet.—British producers would benefit from higher prices envisaged by the Common Market. The document concluded that the over-all effect would be that future net income of the British farm industry would be about the same level whether Britain was inside or outside the Common Market —but would bs distributed very differently.