PM Transcripts

66/ 093
FOR PRESS P. M. No. 68/ 1966
UNITED KINGDOLI ECONOIEC 1EASURES
Comment by the Prime Minister, I1r. Harold Holt
It is obvious that the inrmediate purpose of the United Kingdom
measures is to strengthen their Balance of Payments and thereby
improve the position of sterling.
The measures are designed to do this mainly by achieving what
M r. Harold Wilson called a " shake-out which will release the nation's
manpower, skilled and unskilled, and lead to a more purposive use of
labour for the sake of increasing exports and giving effect to other
national priorities."
We have a fundamental interest in the soundness and progress
of the United Kingdom economy and in the strength of sterling, of
which we are a large holder. We are glad to see this evidence of
British deterrination to keep sterling strong and wish the measures
success in their objectives.
As Mr. Wilson pointed out, British exports had been rising
until the recent seamen's strike. At the same time also imports
had been rising, and this was without doubt a consequence of the
high level of domestic demand. What the measures seek to do is to
impose widespread restraint on domestic demand and through this
secure a re-deployment of labour and other resources.
Taken with the recent rise in bank rate, the measures should
have a fairly strong restraining effect. While it is too early
to make firm forecasts, vie may feel some adverse effect of this
through the impact on cor: Lrodity prices.
The more direct measures to strengthen the United Kingdom
Balance of Payments by reducing Government expenditure overseas
includes action on military expenditure.
This has, of course, been under discussion
for some ti, e. Mr. WAlilson has m. ade it clear that the savings Vuil
be sought without altering the basic lines of external policy,
stated in their defence ' Uhite Paper.
CANBERRA 21st July, 1966: