Britain’s Balance Of Payments

Press, Volume CIX, Issue 31941, 19 March 1969, Page 12

Britain’s Balance Of Payments

Britain’s exports were reduced and imports increased in February. The trade deficit, seasonally adjusted, rose to £62 million, compared with £lO million in January. Over the last three months Britain’s trade deficit has averaged £4O million, the same as for the previous three months; there has been no improvement in the balance of payments on current account for six months. Making due allowance for such things as the dock strikes in the United States, which prevented the shipment of some United Kingdom exports to American destinations in January and February, the record is disappointing. The brave promises made in the early days of devaluation make sorry reading now. In its letter of intent to the International Monetary Fund in November, 1967, the Government said its aim was an improvement of “ at least £5OO million a year ” in the balance of payments.

On present prospects for world trade this should mean a surplus in the second half of 1968 at an annual rate of at least £2OO million. Beyond that there should be a further substantial rise in the surplus as the full benefits of the change in the United Kingdom’s competitive position are felt

In his Budget speech 12 months ago the Chancellor of the Exchequer (Mr Jenkins) said the country must achieve “as soon as possible ” a

balance-of-payments surplus of £5OO million a year. By the second half of 1968 Britain’s over-all balance-of-payments deficit—not surplus—was running at an annual rate of £6O million; and the deficit would have been larger but for a favourable, largely fortuitous, inflow of long-term capital. Apparently the first two months of 1969 have brought no improvement. A “ Green Paper ” published last month pushed forward to 1972 the ■ promised achievement of an annual surplus of £5OO million.

The National Institute of Economic and Social Research expects a small surplus in 1969, and appears sceptical of the Government’s projected surplus of £5OO million by 1972. AU this portends no concessions for United Kingdom taxpayers in Mr Jenkins’s second Budget, to be presented on April 15. To raise sterling above suspicion Mr Jenkins will have to maintain the Bank Rate at 8 per cent to ensure that Britain’s imports rise little if at all, to goad or exhort exporters to further efforts, and generaUy to hold the line until “ the fuU benefits of the change in “ the United Kingdom’s competitive position are “felt”. If the benefits are not apparent soon, the most sympathetic observer must wonder if they ever will be.