Fear of Depression in a Period of Overheating

My Lords, reverting to the immediate crisis which overhangs this discussion, the first thing I should like to say is that we are clearly not yet out of the wood. I hope and trust that the measures announced last week will convince holders of sterling that at last we are in earnest and that this will quell the psychological tornado which broke out some three weeks ago. But we deceive ourselves if we suppose that all that has happened is just another piece of bad luck—the seamen’s strike, the world rise in interest rates, M. Pompidou’s observations on British economic policy, and so on and so forth. The fact is—let us face it—that we are still in an acute position of long-term financial disequilibrium. We are not within sight of financing our overseas purchases and expenditure without running further into debt. For many months it has been becoming clearer that the prospect of balancing the account by the end of this year was illusory and that unless there was an unexpected improvement, the knowledge that this was so was bound to lead to another crisis.