CAB129-52 — Page 92

Page 92

Printed for the Cabinet. May 1952

SECRET

C. (52) 175

CABINET OFFICE

Copy No.

76

RECORD COPY

26th May, 1952

CABINET

THE EXPORT PROBLEM

MEMORANDUM BY THE PRESIDENT OF THE BOARD OF TRADE

I warmly welcome the Chancellor of the Exchequer's Memorandum C. (52) 166 on economic policy. He has referred particularly to the export problem now con- fronting us and has suggested that I should circulate a paper dealing more specifically with the export problem. In this Memorandum, I bring before my colleagues my assessment of the export situation and outlook in the shorter term (Section I), my views on measures to assist exporters (Section II) and some reflections on long-term trade problems (Section III).

2. I would summarise my main conclusions as follows:-

(i) We must put exports first (paragraph 22).

(ii) We need urgently more steel for the manufacture of engineering exports

(paragraphs 11 and 30).

(iii) We need a higher level of investment in productive industry (paragraph 15). (iv) We need lower taxation of industrial profits in order to provide an incentive

for exporters (paragraph 33).

(v) Even if we take all the necessary internal measures in order to expand our exports we are unlikely to be able to sell an extra 20 per cent. very largely outside our traditional markets and at a time when we are facing more highly competitive conditions (paragraphs 42-44).

(vi) That the balance of payments gap will not be closed unless the whole Sterling Area co-operates still further in economising on non-sterling imports and unless we persuade the Americans to adopt a more liberal import policy (paragraphs 45-46).

(vii) That a Commonwealth policy needs to be worked out and discussed with the other members of the Commonwealth at the earliest practicable moment (paragraphs 48-49).

SECTION I

The Export Situation and Outlook

Introduction

3. Our objective is to eliminate the United Kingdom deficit with the non- sterling world in the second half of this year. Taking into account the expected movement of our invisible earnings and the import cuts, the Chancellor in his Budget statement said we should have to provide for a substantial increase in the total volume of exports. It is now proposed in C. (52) 172 that we should expand exports in the next two years, predominantly to non-sterling countries, by £600 million or 20 per cent.

4. At the beginning of this year, the Board of Trade estimated that total earnings from United Kingdom goods would amount to something like £2,750 million during 1952. Allowing for estimated increases in price this would

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