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Volume 526: debated on Tuesday 6 April 1954

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One of the most significant developments affecting our own balance of payments has been the further movement of the terms of trade in our favour. One result of this has been—and the Committee should have all the facts placed before them—that during 1953 the United Kingdom was able to buy a volume of imports 9 per cent, higher than in the previous year at 4 per cent, lower cost. This has been a considerable help to us. But we must also remember—and this is sometimes forgotten—that a movement of this kind also tends to reduce the purchases of some of our best overseas customers from us.

I shall have more to say later about our export performance, but I would simply note here that we cannot expect to enjoy both favourable terms of trade and easy export markets at the same time. It is, therefore, encouraging to record that we increased our exports to those areas, particularly North America and Western Europe, where economic activity remained high and trade was not beset by import restrictions. Some countries in the sterling area found it possible to relax their restrictions during the year, and have made progress in this direction since our talks at Sydney. Our exports have responded to this treatment.

Meanwhile we have to note the manifest increase in the confidence which the world has placed in sterling. This is shown by the strengthening of the reserves, the marked strength of the sterling-dollar rate, and the small gap, over a long period, between the official sterling rate and the unofficial rates for transferable sterling. This confidence has enabled us to make two important moves forward towards a freer system of trade and payments. One is the unification of what is called non-resident sterling and the other is the re-opening of the London gold market. We hope and expect that this will increase still further the strength of sterling and the world's use of it. Certainly the first reactions to these moves have been cheering.