asked the Minister for Finance what measures the Government propose to take to deal with the present adverse trade balance.
Ceisteanna—Questions. Oral Answers. - Adverse Trade Balance.
64.
The increase of £16.3 million in the import excess in the first five months of 1968 compared with the first five months of 1967 is not a cause of immediate concern. Our external reserves are substantial and we can face a moderate balance of payments deficit without concern. As the "Review of 1967 and Outlook for 1968" (Pr. 9992) indicates, a wider gap between merchandise imports and exports was to be expected this year following the exceptionally favourable outturn on external account in 1967. Import growth was unusually low in 1966 and 1967 and a significant rise in imports is inevitable—and, indeed, desirable—so that the higher investment and consumer demand resulting from increased economic activity may be maintained. It is encouraging that exports, which expanded strongly in 1966 and 1967, have again risen substantially in 1968. In the first five months they rose by 18 per cent. Further, in assessing the external payments situation it should be remembered that the deficit is usually greater in the first half of the year.
It is, of course, necessary to keep a careful watch on how the trade situation develops to ensure that the balance of payments deficit remains within safe limits. Too sharp a rise in domestic incomes and spending must be avoided as it could widen the already large import excess to the point where measures to safeguard the balance of payments at the possible expense of employment and economic growth might have to be taken.
Would the Minister agree there was too much of an increase in the value of consumer goods imported?
I would not say that.
Would the Minister be worried about it?
Not particularly at the moment. I do not think we should ever aim at a complete equilibrium in our balance of payments. If we want to have economic expansion, then we have, I think, got to be prepared to tolerate a moderate deficit from time to time, provided our external reserves position is satisfactory.
It is about time the Minister came round to that point of view. I say that not of the Minister personally.
It has always been my view.
And so long as they are not consumer goods.
The remaining questions will appear on tomorrow's Order Paper.