TNAG-0522-FCO40-617-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1975 — Page 102

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1975.

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RECORD OF A MEETING BETWEEN LORD GORONWY-ROBERTS AND THE GOVERNOR OF HONG KONG HELD AT THE FOREIGN AND COMMONWEALTH OFFICE ON WEDNESDAY 9 APRIL AT 10.00 A.M.

Present

Lord Goronwy-Roberts

Mr D Ennals

Sir D Watson

Mr P J E Male

Mr P L O'Keeffe

Mr W Bentley

Mr AC Galsworthy

Mr B H Dinwiddy

Sir Murray MacLehose

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I BUDGETARY AND ECONOMIC SITUATION

1.

Sir Murray MacLehose said there had been a further decrease in industrial employment during the first few months of this year but the decrease was much less sharp than for the last two quarters of 1974. The decline in industrial activity had perhaps levelled off for the present. There was wide expectation that there would be some improvement in overseas markets in the second half of 1975, but it was difficult to judge whether this optimism was justified. A good number of those so far laid off had found employment elsewhere in the economy.

Industrial employers had been reluctant to lay off workers in the hope that the recession would be short. But if the present expectation of an up-turn towards the end of the year faded, there was reason to fear widespread and growing unemployment in the economy generally.

2.

Lord Goronwy-Roberts said that HMG, while looking forward to the introduction of a more progressive tax system, appreciated that substantial changes might not be practicable for 2-3 years. The 1975/76 Budget had been as good as could have been expected in Hong Kong's current circumstances. Sir Murray MacLehose added that it was particularly disappointing that the Hong Kong Government, after successfully generating popular enthusiasm for its social expenditure, should have become subject to such tight budgetary constraints because of outside economic factors.

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