CAB129-52 — Page 79

Page 79

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Page 84 way out which I can see short of a drastic revisloff duroÉxt&Ral

commitments of all kinds, is a major expansion of our overseas earnings, both from physical exports and invisibles. I do not myself attach great weight to detailed forecasts for a long period ahead. But the conclusion seems to me inescapable that an expansion of something of the order of 20 per cent. in our export earnings above the 1951 level-say £600 million a year-is indispensable, unless we are prepared to reshape the whole of our national life. Moreover, it seems likely that this expansion will have to be concentrated on the difficult markets outside the sterling area, and particularly the dollar markets, for the other sterling area countries are unlikely to be able to afford to buy more than they did last year.

31. In other words, our position will remain highly precarious, and we may be swept into an open sterling crisis at any moment, until we have found means of improving our competitive power and expanding our earnings on a scale far greater than has yet been envisaged.

32. I see no reason for surprise at the scale of the problem of putting our external financial position right. As I said in C. (52) 166, we are now the biggest debtor in the world instead of being the biggest creditor in the world, yet we are carrying loads far greater than we ever carried before.

Treasury Chambers, S.W.1,

23rd May, 1952.

R. A. B.