TNAG-0042-FCO40-78-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1967 — Page 77

It is

We do not know the composition of (c), but the figure is small and some part of it may well represent transfer payLents (rather than payments for services). therefore assumed as a matter of convenience that these

The net effect of the earnings would cease entirely.

disappearance of these four items would be a gain to the U.K. balance of payments on invisible account of

£10 million.

7. The effects of the loss of Hong Kong on the visible account would depend to a major extent on the use (if any) to which the resources currently used for exports for Hong Kong were put and how far U‚K, resources were fully employed at the time. The extreme worst assumptions

would be:

(a) that imports from Hong Kong would be entirely

replaced by imports from third countries and

(b) that the resources used for exports to Hong Kong

would be put to no use - 1.0. be unemployed.

On this basis the effect on the trade balance would be:-

Loss of exports

63.2

less:

Import content of exports

(say 25 per cent)

+ 16

8 ay

- 47.2

Disregarding secondary effects (which in view of the smallness of the figure is reasonable) this £47.2 million would roughly measure also a loss of real income (it woul be an underestimate in so far as replacement imports from third countries (as is likely to be the case) were more expensive than imports from Hong Kong).

Against this

however in both balance of payments and income terms has to be set the £10 million in paraɛraph 6 above.

3

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