TNAG-0479-FCO40-544-Strength-of-garrison-in-Hong-Kong-1974 — Page 125

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if.

ive slide.

let matter

card. Indeed 108

well

They mighty worsen,

Sheebie

because me off cubią hits Britain

particularly hard

i wew

af

On

relatively high dependendure on

essential imports, ow existing non-

or defert, ad our high rate of inflation.

SECRET

of France and Germany doubled. Our GNF is now

two-thirds that of France, and only half that of

Germany. The predictions are that these trends would

continue Our economic position relative to our

Since the So's major European partners has changed from one of

comperative affluence to one of relative, and

increasing, poverty. It is arguable that there may be some causalız connection between our consistently higher defence spending, and our poor economic showing vis-a-vis our European Allies.

But what is certein

is that we need now to take some kind of corrective

action.

Iublic expenditure as a whole must be

subject to severe restraint, and defence cannot be

NP.

L

excluded. The cost of the proposals which linisters

Should have agreed to form the basis of our future defence

Structure crfeccitution will be such as to ensure est some increase in our defence spending in real terms over

the ten years ahead. But it is only fair to explain

et the outset that they will involve a reduction in

the share of ublic expenditure and the proportion

of our devoted to defence.

GHJ

our

L

which we shall

>

While Lit

Indeed [+]

Undoretending that th

they will rean that Pritish

the

proposals have been approved by Ministers or the

NOTHING TO BE WRITTEN IN THIS, MARGIN

defence e penditure as a proportion of GI will by

This, in

the early 1980's stabilise at some 44% of GH. the view of The Cabinet, is acceptable. A higour figure would not be.

7. I have thought it right to set cut these economie

facts at the outset. 1 should explain that,

and to explai

The Hedic Minking behind them,

f,

whereas we are ready and indeed anxious to discuss with you any means whereby the modifications in our defence contribution might in your view best be

differently done the ministerial decision to wake.

available resources sufficient to finance the: e

/contributin

ARCLE