CAB129-52 — Page 85

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16. Passenger Cars. Deliveries of passenger cars have been severely restricted for many years and the restrictions announced on motor vehicles for the home market are already so severe that it is questionable whether in practice it will be possible to maintain this low level. It may be more realistic to contemplate a slight progressive relaxation in these restrictions.

17. Consumer Goods. Measures have already been taken to reduce the output of metal consumer goods to the home market by a substantial amount. I think that these restrictions should be maintained as long as the defence programme lasts, but I recognise that they will involve a fall in the output of and loss of labour by those firms which are unable to find export markets.

18. But if it is accepted that large cuts cannot be made in home civil require- ments, it is clear that the metal-using industries cannot meet all the demands which are being placed upon them. The requirements which are changing rapidly are those of defence and of the balance of payments. The balance of payments objec- tive cannot be met if the demands of defence on the engineering industries continue to increase as rapidly as at present contemplated.

19. The following table illustrates the broad magnitude of the problem.

Supplies of Metal Goods and Claims upon them

£ million at March 1952 prices

1951

1952

(actual)

(forecast)

1953

1954

1955

Production plus imports

3,725

3,900

4,100

4,400

4,750

Required for repair work, spare

parts, industrial supplies, &c.

865

880

900

930

1,040

2,860

3,020

3,200

3,470

3,710

Home civil uses-

Investment (excluding passenger

cars)

1,075

1,110

1,140

1,150

Passenger cars

70

60

60

70

Consumer goods

285

210

- 210

210

Available for exports and defence...

1,430

1,820

2,060

2,280

Present requirements for defence (including civil defence and infra- structure)

300

500

Therefore, available for export

1,130

600 1,220

650 1,410

Export requirements as now seen

1,130

1,460

1,630

1,630

In 1952 we have a defence programme which is expected to absorb more than the whole of the disposable increment in supplies of metal goods. We are, therefore, having to reduce all home demands, including industrial investment, in order to permit any increase in exports at all. Our export tasks require, however, that nearly all the increment in supplies of metal goods should go to export. In 1953 and later years the export task is so great that it will not be possible to achieve it if industrial investment is kept down. But if this is so and if defence production continues its momentum, it will be impossible to make sufficient exports available to meet the balance of payments task. The shortfall might be of the order of £220-£240 million. This suggests that in the light of our changed economic circum- stances the load which our defence commitments are putting on the metal-using industries is too large for us to bear unless we are prepared to make very serious sacrifices in our standard of living.

20. What are the practical possibilities of easing the metal goods problem? Broadly speaking we might do any of the following things:

(a) Import less.

(b) Export more of other goods.

(c) Sit back and hope that other people will help us.

(d) Sit back and hope that the problem willl ease itself because prices, &c., may

go in our favour.

(e) Reduce our external payments on capital account.

(f) Reduce Government overseas expenditure, including defence.

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