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may have to face an increase in import costs of the order of £700 million this year. If to this is added some £150 million required to provide the raw materials for a further increase in manufacturing production, imports in the aggregate (even before allowing for special stockpiling purchases) may reach as much as £3,200 million in 1951.
97. Because of the major uncertainties both as to movements in prices and availability of supplies, this figure can only be a very rough indication of the probable size of the import bill. If we fail to get the supplies, the actual figure may fall short of £3,200 million, but in that event the conse- quences, particularly for our production effort, might be very serious.
Invisible Earnings
98. One of the outstanding features of the United Kingdom's balance of payments in 1950 was an increase of over £200 million in the surplus on invisible account (Table 15). Smaller expenditure contributed a little to this result, but the major contribution came from larger earnings. There was an increase of one-third in tourist receipts and a substantial, though relatively much smaller, increase in shipping earnings, in which all the major categories shared. Of particular importance, however, were, first, the earnings of our overseas investments (mainly those connected with the production of raw materials like rubber, tin and other non-ferrous metals which have experi- enced the most notable increase in prices); and second, the operations of the extensive British oil industry, which enjoyed both higher prices and higher output and sales in 1950. It would be reasonable to expect still higher gross earnings from these sources in 1951 and thereafter, but increased costs will help to reduce the net gains. Moreover, the United Kingdom's obliga- tion under the Loan Agreements with the United States and Canada require repayment to begin at the end of this year. On balance, the surplus on invisible account should be rather over £100 million greater than in 1950, giving a total for 1951 of the order of £450 million.
Exports Required
99. With a prospective import bill of about £3,200 million, this leaves something like £2,750 million to be earned by visible exports and re-exports if the objective of external balance is to be achieved. By comparison, in 1950-a highly favourable year for United Kingdom production and export trade-exports and re-exports totalled rather over £2,200 million.
100. A large contribution towards increased export earnings may be looked for from higher prices. The rapidly rising costs of imported raw materials are inevitably forcing up export prices, and already by January 1951 these were nearly 7 per cent. higher than the average for the whole year. Any general movement of internal costs would also have some effect. To the extent that higher prices do not affect the United Kingdom's competitive position; these increases in export prices will help to offset the higher cost of imports. None the less, too rapid an increase in export costs might endanger · long-term trading connections. For while world demand for many classes of manufactures is expected to continue at a very high level, there are likely to be growing difficulties in selling certain types of consumer goods, particularly in face of the recovery of German and Japanese industrial production. The dangers inherent in this situation will be recognised by United Kingdom exporters, who have made great and successful efforts during the post-war period to keep their prices fully competitive in world markets.
101. It is out of the question that the whole of the required increase in export earnings can be obtained through the rise in prices. The rest can only come from an increase in the volume of exports, and to achieve such an increase in the circumstances of 1951 will be a task of exceptional difficulty. A substantial reduction is inevitable in the volume of exports of raw materials and semi-finished metal products, especially coal and steel. Engineering exports too are bound to be affected by rearmament in spite of the steps which the Government is taking to protect them, and it may not be possible even to maintain them in 1951 at their 1950 volume; it would certainly be imprudent to assume any increase.
102. The broad groups of raw materials, metals and metal products accounted in 1950 for some 55 per cent. of total exports. Most of the remainder were consumer goods. of which textiles and clothing are by far the age import &lasses. It is this sector of the export trade aga musof 587 now bear the brunt of the task of increasing the total volume of exports. Many of these consumer goods industries are likely to experience difficulty over supplies of raw materials, and they too have Service demands to meet. More- over, they will face problems of selling as well as of production.
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