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Trade Balance (European Community)

Volume 934: debated on Monday 27 June 1977

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11.

asked the Secretary of State for Trade what is the latest estimate of the United Kingdom's balance of trade with the rest of the EEC.

16.

asked the Secretary of State for Trade what has been the trade balance with the rest of the EEC for the latest period of 12 months.

22.

asked the Secretary of State for Trade what was the balance of trade between Great Britain and the EEC countries during 1976 and 1977 to date; and how this compares with 1975.

29.

asked the Secretary of State for Trade if he will make a statement on the latest trends in United Kingdom trade with other members of the EEC.

In the year ended the first quarter of 1977, the United Kingdom had a visible trade deficit, on a balance of payments basis, with the EEC of £2,235 million. This compares with £2,077 million in 1976 as a whole, in both cases less than the deficit in 1975.

As our trading position with the Common Market has become substantially worse since our entry, to such an extent that the overall deficit now is almost exactly the same as the amount we had to borrow last year from the IMF, why do we not get out now instead of having to borrow all this money to pay for our membership of this rich man's club, which is undermining our economy and contributing largely to inflation and unemployment?

Although the deficit with the EEC on visible trade remains a very serious one, it has, relatively, been getting less. The export-import ratio shows that it reached its lowest level in 1975, and since then it has been substantially improving. This reflects the fact that last year our exports to the EEC grew half as fast again as our imports from the EEC.

Although the annual deficit is running fairly regularly at £2,300 million, is not one of the worrying matters the deficit on trade in manufactures of all kinds with a country like Germany which, I believe, is now running at about £1,000 million to £1,400 million a year? That was the area in which we were supposed to be doing rather well when we joined the EEC.

It is true that the deficit on manufactures is extremely serious. In fact, it concerns not only Germany, to which we tend to give a lot of attention, but the Netherlands. It reflects the fundamental problem of British industry, which is lack of competitiveness and lack of productivity. The basic requirement is to put that right. How far it is helped or impeded by the EEC is a matter of question.

Will my hon. Friend confirm that since we joined the EEC our export position has improved by 87 per cent. as against 49 per cent. for the rest of the world? Is it not time that the Government started to tell the success story of joining the EEC instead of hearing all this nonsense time after time?

It is true that our trading position vis-à-vis the EEC has improved relative to our trading position with the rest of the world. For example, in the first quarter of 1977 compared with the first quarter of 1976, our visible trade deficit with the EEC worsened by £95 million, but with the rest of the world it worsened by £1,141 million. It is also true that the deficit has remained at slightly over £2 billion in money terms for the last three years. Because it is in money terms, that is a reducing proportion of our total trade deficit.

Does my hon. Friend think that the situation would improve by getting out or by staying in?

It is extremely difficult to disentangle the exact effects of the EEC on our trade position. It depends not on short-term effects but on the long-term effects of eliminating tariffs, and that will depend on our differential economic advantage in particular sectors. There can be no doubt that it varies between sectors. For example, we have done relatively well in textiles and chemicals and potentially could do well in insurance. We have done poorly in cars, plastics and cereals.

Does the hon. Gentleman agree that the uncompetitiveness of British industry is one of the main strands of the deficit with the EEC? Another strand is the fact that there has been a great switch to trading with the EEC rather than with third countries. Is it not also a fact, as the hon. Gentleman has tentatively said, that our trading position with the EEC is improving month by month, notwithstanding the machinations of the Government?

I indicated from the figures which I quoted that the deficit has increased. It is larger on an annual basis, taking the figures for the first quarter of this year, than it was last year. I said that the export-import ratio is improving, and there is certainly reason to suppose that it will improve further.