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"The strategy of the Government in working for an adequate balance
of payments surplus is based on switching productive resources to those
sectors which benefit the balance of payments.
"We have made use of a number of weapons to achieve the switch
of resources: our prices and incomes policy and our containment of public
expenditure are among the most important in achieving this turn round.
"We have supplemented these with taxation and monetary policies
which have been extremely severe.
"Towards the end of last year despite the tough budget, it began
to appear as if consumption was again rising to the levels of the previous
year. This coupled with the continuing high level of imports, led us to
introduce hire purchase restrictions and the subsequent measures of last
November; increased purchase tax, credit restrictions and an import deposit
scheme, and these measures were intended primarily to correct the rise in
consumption."
Bank Rate
"Our determination to make our policies effective was also
demonstrated by the recent increase in the bank rate to 8 per cent. This
was not a measure taken for international monetary reasons but to help the
steps we have already taken to control domestic credit.
"This strategy was continued in this year's budget. It aimed to
increase taxation by £270 million in 1969/70 and by about £340 million in
a full year.
"There are some who argue that there was an easy way out: but it
is one we have rejected. They argue we could effect a radical change in
our Balance of Payments by slashing our overseas commitments, and then
imposing import controls.
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