CAB129-53 — Page 233

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23319 MAJES3302NMENT)

ERT

THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT)

:

SECRET

C. (52) 245

16th JULY, 1952.

CABINET OFFICE RECORD COPY

CABINET

THE EXPORT PROBLEM

Memorandum by the President of the Board of Trade.

COPY NO.

ì

248

We have before us memoranda about defence, about investment in industry and in social services and about the balance of payments. All these are matters of great importance. Our resources are insufficient for us to tackle all of them together.

2.

We all agree about the desirability for adequate defence measures, for social services and particularly for housing. I still consider that the Chancellor of the Exchequer was right when he said in the House of Commons on the 12th June that we must put the balance of payments first. If we fail to solve that problem we shall fail in all else too.

3.

We must therefore increase exports quickly. The Chancellor asks for an increase of 20%. I have set out my views on the export situation and outlook in C. (52) 175. The latest results are certainly not more encouraging than I stated in that document. So far from going up the daily rate of exports has been going down, March £9.3 millions, April 9,1 millions, May £8.4 millions, June £8.1 millions. Even in metals and engineering products there was a decline from about £119 millions in April/May to about £112 millions in June (both months being taken on a comparable 26 days basis). Much of the decline in total exports is due to Sterling Area import cuts, but the downward trend in metal goods and engineering products is serious since exports of these goods to all markets are either dollar earners or dollar savers,

4.

It will remain hard to sell consumer goods. We could sell more engineering goods if we could make them. Some firms have heavy export order books but are unable to speed up deliveries. Others are losing orders now because they cannot quote delivery dates comparable to those of their principal competitors abroad.

5.

industries. our help.

No amount of exhortation will help our engineering export They are well aware of the need to increase exports, but they need Their principal difficulty is the overloading of capacity and shortage of steel with which to make the goods the world demands of them. In my judgment we cannot help them adequately if we stand fast now upon a plan to limit defence production by the metal-using industries to £500 millions in 1953/4. This would amount to little more than not increasing still further the claims of defence. An agreement not to increase the burden is not enough. It will not free new resources for the export industries. We know also that a high level of defence production almost inevitably requires a high level of defence investment.

6.

I attach a few examples of the difficulties

exportats 433at 253f defence orders.

The Minister of Supa have arisen for

fra's

to these clashes in his memorandum on exports from the metal-using industries

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249