Confederation of British Industry
21 Tothill Street
Telephone 01-930 6711
Cobustry London SW1
November 23, 1967
My Newsletters to you seem destined to be interrupted by emergencies. This was never more true than of the present circumstances. Devaluation and a whole series of consequent measures came as a great shock to us all last Saturday night.
I think my first job is to try and give you something of a balanced assessment of the impact of all this upon industry. Obviously this is not easy to do since so much must remain conjectural. However, I will try and give as balanced an impression as I can.
On the credit side:
1. We are presented with an opportunity to achieve a marked improvement in our exports. The devaluation allows us either to go for an extension of our overseas markets with a considerable competitive edge; or to achieve higher profit levels on our existing level of exports; or to go for a combination of both. These possibilities are, of course, dependent upon two factors:
(a) The mounting of export campaigns adequate to take advantage of the situation. There often seems some misunderstanding in other spheres as to the rapidity with which industry can react to a given situation. Export effort is the product of long and intensive planning and work, not the flash reaction to a transitional advantage. The motor-industry is perhaps something of an exception in its ability to exploit a situation like the present one. Export too is more and more dependent upon overseas investment as a vehicle for its best results; as we all know, overseas investment has been deliberately restricted by government policy over the past three years; and
(b) the availability of goods and services for export. This availability arises where the home market is restrained to a point where some slack exists in production resources (as is the case at the moment), or where the attractiveness of the export market exceeds that of the home market. As far as the latter consideration is concerned, it seems unlikely that even with devaluation exports will prove more attractive than home sales if only because on the form up-to-date there was already such a great disparity between the two. As far as home demand is concerned, the judgment one can make of the government's measures does not indicate a very marked lessening in consumer spending, at least within the next six months.