Speeches, etc.

Margaret Thatcher

House of Commons Statement [Heads of Government (Downing Street Meeting) (G7)]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [931/901-21]
Editorial comments: 1530-1611. MT spoke at cc903-04.
Importance ranking: Major
Word count: 8114
Themes: Economic policy - theory and process, Foreign policy - theory and process, Foreign policy (development, aid, etc), Women
[column 901]

HEADS OF GOVERNMENT

(DOWNING STREET MEETING)

The Prime Minister (Mr. James Callaghan)

With permission, Mr. Speaker, I should like to make a statement on the Downing Street Summit, which was attended by the Presidents of France and of the United States, and the Prime Ministers of Canada, France, Italy and Japan and the Chancellor of the Federal Republic, as well as the Finance and Foreign Ministers of the countries represented, and yesterday by the President of the European Commission.

Nearly a year has elapsed since our meeting in Puerto Rico, and there was a general wish among the leaders of the major industrial democracies to consult, to exchange experiences and ideas and to harmonise as far as possible our responses to our shared problems, recognising that our well-being is bound up together. Our discussion had the purpose of agreeing a common analysis, and so a common approach.

We have been able to share our views with the new American Administration and to review the state of the world's economy and examine our present policies as a whole. We have reviewed our policies to combat inflation and unemployment and discussed the policies that will be needed to reach a successful conclusion of the Conference on International Economic Co-operation. We also readily responded to President Carter 's call for a close examination both of the need to conserve energy and of the dangers of nuclear proliferation.

Let me briefly restate seven target areas where we pledged ourselves to action. First, we agree that our most urgent task is to create more jobs, including special measures for young people, and that hand in hand with the fight against unemployment is the fight against inflation. Inflation destroys jobs, corrodes democracy and undermines economies strong and weak.

Secondly, Heads of Government committed themselves to maintain their tar[column 902]gets for economic growth or for stabilisation policies. We recognised that growth rates must be maintained in the stronger economies, increase in the weaker economies, and inflation tackled successfully in both, if we are to cut unemployment and provide a basis for sustained non-inflationary growth.

If countries concerned seem likely to fall short, they will adopt further policies to achieve their targets. This should give added stability and confidence.

Thirdly, we committed ourselves to seek more resources for the International Monetary Fund and to support the link between its loans and the adoption of appropriate stabilisation policies. Such facilities are essential if countries now in balance of payments deficit are to maintain reasonable levels of internal activity and foreign trade so that the world can avoid the danger of new trade and payment restrictions.

The danger of new trade restrictions also prompted our fourth pledge: that we would work to expand opportunities for world trade by giving a new impetus to the multilateral trade negotiations originally launched at Tokyo in 1973, whilst not removing the right of individual countries to avoid significant market disruption.

In view of the increase in demand for energy and oil imports, which is placing increasing pressure on finite sources of fuel, we pledged ourselves to greater energy conservation and agreed on the need for greater exchanges of technology, joint research and development for the efficient use of energy sources, including the improved production and use of coal.

This brought us face to face with the nuclear dilemma. The present generation has an awesome responsibility for the future of mankind. We agreed to launch an urgent study, the first stage of which we intend will be completed within two months, of how to reconcile the world's demand for nuclear weapons. Our initial studies will be concerned with the terms of reference for evaluating the nuclear fuel cycle internationally.

Our seventh pledge was to the world's poor, for whom the impact of the oil crisis and the world recession has been devastating. The countries attending the Summit agreed to do all in their power by means of trade, aid and finance to help the developing countries towards a just share in [column 903]the sustained growth of the world economy. We should work for a successful conclusion of the CIEC in Paris at the end of the month. We also invite the COMECON countries to join us in this, the only war worth fighting—the war on want.

We placed on record a welcome for the work being done to achieve international agreement to eliminate irregular practices in international trade, banking and commerce.

The text of the Downing Street Declaration, together with the fuller Appendix issued with it, will be published in the Official Report.

Mr. Speaker, all of us recognised the difficulties of raising standards, or in certain countries even of maintaining them, and the problem of overcoming unemployment. But we shared a common determination to succeed, and we ended our discussions with the confidence that our democratic systems have the resilience and the inner strength to surmount our present difficulties.

It is our perception that the world economy is one and must be managed increasingly as one. This weekend the seven leading industrial democracies pledged themselves to a programme aimed not simply at their own future prosperity but in working for that prosperity to be more fairly shared in a safe and peaceful world.

Mrs. Thatcher

I thank James Callaghanthe Prime Minister for making that statement, and also congratulate him on having the Summit at Downing Street and on his part in presiding over it.

I have three points to put to him. Because I received his statement only shortly before he rose, I took the opportunity to look at other communications from other similar conferences in Rambouillet and Puerto Rico. I found that they are all very similar in what they say about inflation, unemployment, the need for recovery without inflation, the need not to have protectionism, to conserve energy and to renew confidence. Will the Prime Minister agree that one should not expect too much to emerge in practical terms from the Summit? This is a serious point: will he agree that the greatest value of such conferences is the meeting and understanding between the [column 904]leaders of the great industrial nations which, in itself, is worth achieving?

Will he be bringing forward any practical proposals as a result of this Summit? Will he agree that the most practical item to emerge—and we welcome it—is the help to the Third World and the decision to establish a fund to stabilise commodities?

Finally, as this was a very important conference, what steps did he or any other Heads of State or Ministers from other countries take to see that women are represented at these conferences?

The Prime Minister

I thank the right hon. Lady for her courteous comments at the beginning of her questions. It is true that the communiqués are similar when we meet, but I think that that is the measure of the depth and complexity of the problems that the world now faces. It was interesting that the Prime Minister of Japan had been present in London during the 1930s. He made an interesting contribution, in which it was made clear that the problem of unemployment now is totally dissimilar from the problem as it existed in the 1930s. He made an interesting contribution, in which it was made clear that the problem of unemployment now is totally dissimilar from the problem as it existed in the 1930s, and indeed from the problems of the period before 1973. It is for these reasons that the Heads of Government and Heads of State need to meet at regular intervals. I agree with the right hon. Lady about that.

I do not think that enough credit has been given to the world for the successes which have been achieved, bearing in mind the pressures under which Heads of Government have been from their electorates and their own people to introduce restrictive and protectionist measures. There has been a common perception that this would lead the world into something much more like the 1930s. The fact that we have been meeting has enabled us to resist those pressures, which, however tempting they might seem in the short term, would be very damaging to world trade in the long run.

As for practical proposals, one of the more important matters to emerge has been the agreement to monitor the rates of growth of world trade in our countries, especially in those which are growing faster, so that if they fall short they have committed themselves to take new measures to ensure that they attain those targets. That is very important as a means of enhancing confidence and stability in [column 905]the business community and elsewhere that investment decisions have to be taken.

As for the Third World, there were a number of proposals there on which we are working in order to bring the CIEC to a successful conclusion—such matters as stabilisation of certain export prices, if that can be achieved; funds to assist where stocks sometimes get too high, or, indeed, too low; funds perhaps to assist those countries which are deeply in debt at the moment and which suffer more than any of us. All these proposals are under consideration.

I would say to those who doubt the value of these meetings that it is not our job at these conferences—I have always taken this view—to produce a blueprint for the future. What we must try to do there is get political impetus for the direction in which we should go. Then that should be fitted into the various international bodies—the IMF, the OECD, UNCTAD and the others, of which we are part only of the membership—in order to ensure that they get results.

On the right hon. Lady's last question, I regret that no ladies were present. I shall certainly take note of her application for the post, but I cannot say that she will necessarily find that she will be successful.

Mr. David Steel

May I join the Leader of the Opposition in congratulating the Prime Minister on his personal success at this summit?

Mr. Cormack

Why were you not there?

Mr. Steel

I should like to ask two particular questions. What contribution will our own Government make to the study of the danger of nuclear proliferation? Second, after this meeting, has the position of the President of the European Commission at future Summits of this kind been regularised?

The Prime Minister

On the first question, we are in a favourable position to make a contribution on this matter because we are in the forefront of nuclear technology. Therefore, we shall be playing a large part in the small group which is to be set up on this matter. I hope that when we get the report, inside two months, we shall then be able to see [column 906]whether we can proceed to the next stage that President Carter is very keen about—the international fuel cycle evaluation—and to see which fuel cycle would be most appropriate to the world and whether we can get some agreement on that to safeguard the world against the risks.

The future position of the President of the Commission is a matter for the Community itself to deal with and not for that conference as it stood.

Mr. Faulds

Whilst warmly congratulating my right hon. Friend on the success of this seven leaders' conference and his personal contribution to it, may I ask whether he seriously believes that not only the COMECON countries but also Japan will respond more readily and liberally to the needs of the Third World?

The Prime Minister

These matters were discussed with the Japanese Prime Minister present and I had a bilateral discussion with him about this and about Japan's trading policies at Downing Street after the Summit Conference had concluded. It is not for me to speak for Mr. Fukuda, or perhaps to go into detail about what was said, but certainly he was the one who pointed out the problems of the existing situation in the world from his previous experience, going back about 40 years. I hope therefore that he will follow up his analysis with the appropriate conclusions.

Mr. Anthony Grant

As the priority seems now to be to conquer unemployment, did the Prime Minister in his discussions with President Carter get the impression that it is absolutely no part of United States policy to use protectionism, either general or narrow, to conquer their own unemployment problems in any particular field?

The Prime Minister

Everyone is under pressure in this area, including the President of the United States. He is resisting these pressures in the case of some elements of trade but not in the case of others. In all cases, certain political decisions will be taken by Governments. However, what is important is that by our standing together the general onrush for protectionism has been resisted. The resistance has become a little frayed at the edges in a number of cases, but we have achieved more success than I would [column 907]have expected in this area. The President of the United States, like the remainder of us, is satisfied that to depart from that general principle would mean more unemployed in the world and not fewer.

Mr. Conlan

Would my right hon. Friend please convey to President Carter the warm thanks of the people of the North-East for the pleasure and joy that he brought to their region on Friday during an all-too-brief visit?

The Prime Minister

The President thoroughly enjoyed himself on Friday. I always thought that the people of the North-East would give him a warm welcome, and they did. I am sure that not only will he never forget it but that it has strengthened the bonds of affection between him and this country.

Mr. Forman

Since it is envisaged that the evaluation of the nuclear fuel cycle which the experts will conduct may take as long as a year, was it agreed that in the meantime Britain and other countries which are engaged in the nuclear fuel cycle business should not go ahead with overseas reprocessing contracts?

The Prime Minister

The work in the nuclear suppliers' club will continue, of course, on the matter of safeguards. As regards our own possible contracts for reprocessing, until we can conclude such an agreement on these matters as the hon. Gentleman has mentioned, we shall have to reach our own conclusions, as will the United States, on the export of uranium. We are all still free to do that, but I hope that all of us in reaching our conclusions will take into account the general principles on which we based ourselves yesterday.

Mr. Atkinson

Will my right hon. Friend accept that the House will be thrilled to learn from him that the British Government now have much more confidence in British nuclear engineers than they have had in the past and that he is now confident that we can take world leadership in these matters? In regard to the report that my right hon. Friend will now submit to the meeting of the rich and the poor countries on 31st May, before that report on nuclear affairs goes forward will he give some consideration to the political problems which exist, in the sense that, in the United States, Ger[column 908]many and elsewhere, nuclear reactors and the nuclear industry are mainly in the control of the private sector? This means that the Government control is somewhat limited over the contracts which those industries are likely to place with the poorer countries. In this country, we are fortunate in having public ownership of the nuclear industry. Therefore, will my right hon. Friend have further consultations with the committee of experts which has now been set up to see whether a common solution can be found to overcome this difficulty of the nuclear industry elsewhere remaining in private hands?

The Prime Minister

The manufacture of reactors in this country is in private hands, too, as it is in the United States or, indeed, in France. But Governments have the responsibility to impose safeguards upon the circumstances in which these reactors should be exported, the nature of the reactor and what safeguards should be evolved for the use of the spent fuel. All of these things must be overseen by Governments irrespective of whether the manufacture of the particular reactor is in private or in public hands.

Mr. Henderson

Is the Prime Minister aware that we generally welcome the view that means must be found to deal with unemployment? Does that mean that there is to be a shift in Government policy to laying stress on reducing unemployment rather than reducing inflation?

The Prime Minister

No, it does not. Inflation and unemployment go hand in hand. One depends on the other. One can, of course, have a low level of inflation and a high level of unemployment as, indeed, the Federal Republic has at present. This is one of the difficulties that has led experts and authorities to conclude that the present recession is different in form from that before 1973 and certainly from that before the war.

Our position is really quite straight-forward. The smaller the increase we have in earnings this year, the lower will be our rate of inflation next year. There is a direct correlation between the two. That is our task. If we have too high a settlement, our rate of inflation will be much too high in itself. Our task is to get down the rate of inflation but at the same time to take special measures, which we can take, including [column 909]those for young people, in order to lessen the impact of unemployment.

Mr. Jay

Does the Summit Declaration against protectionism apply to agricultural as well as to industrial goods?

The Prime Minister

That was one of the most difficult topics we had to discuss because the United States and Canada clearly have a particular interest in this and some member countries of the Community have a different interest. But we cannot solve the trading problems of the one without regard to the social problems of the other. Certainly, there is a desire to ensure that protection should be lessened in agricultural goods as well as in industrial goods, but I have a feeling that we are likely to make faster progress on the second than on the first.

Mr. Baker

Will the Prime Minister accept that many hon. Members on both sides of the House welcome the fact that the Summit turned its face against “beggar my neighbour” protectionism? Will the right hon. Gentleman agree to give the House an indication of any changes in Government policy which will follow the Summit? Does the British Government intend to go for more growth than that envisaged by the Chancellor in his Budget Statement? If the Government intend to do that, how can that be reconciled with their statement to control the rate of inflation?

The Prime Minister

The hon. Gentleman puts his finger on the crux of the problem. At the moment our task is to pursue our stabilisation policies as they have so far turned out. With the improvement in our balance of payments, which is undoubtedly now taking place, I believe that we shall see a further improvement as the months go by. Perhaps our situation will alter. But for the moment and for the time being our task is to pursue existing policies. The fast-growth countries who might appear to be falling behind in their growth rates—if they do so that would have an adverse influence on us—have pledged themselves to maintaining their fast growth rates or to review policies and take further steps to ensure that they are maintained later.

Mr. Alan Lee Williams

Will my right hon. Friend confirm whether he had any [column 910]discussion with President Carter regarding the standardisation of weapons within NATO?

The Prime Minister

Yes. There were talks outside the formal sessions. This is a matter in which President Carter is very interested and in which he would like to secure greater standardisation without necessarily giving all the advantages to the United States by so doing. It is something that he is quite sincere about, and he has also gone on public record with regard to his policies on the export of arms. I know that it is his desire that the export of arms in itself should be smaller.

Mr. Younger

Will the Prime Minister say whether the further studies on nuclear proliferation will include the question of the dumping of nuclear waste? If so, will he instruct all concerned in this country to suspend any applications for planning permission to look for sites for the dumping of nuclear waste until these studies are completed?

The Prime Minister

These studies will include this question, which is one of the most important questions. But it would be quite wrong to postpone planning decisions or to invite people not to go ahead with them until we have concluded our studies. We want to be ready to proceed in this field if we can be certain that there will be safety and that we are not endangering future generations. I see no reason why we should halt the preliminaries on this while these studies go on.

Mr. Molloy

Is my right hon. Friend aware that his arranging and chairing of this meeting is deeply appreciated not only by the people of our own country but indeed throughout the western countries and the developing lands in particular? Does he not also agree that what has been revealed at this Summit, which should have been called many years ago, is that the principle of laissez-faire competitive fighting has to be dropped and that there is now an urgent need for a form of universal co-operation? This ought to be monitored. Will he see to it that if possible the monitoring of these broad principles for a return to sensible world co-operation will be reported to this House from time to time?

The Prime Minister

I think the principal reason that we have held three conferences of this sort within a relatively [column 911]short period of time is the perception that the world economy is interdependent and that it must be increasingly managed as one. It cannot be left to free market forces in its entirety. There is a place, but not an excessive place, for market forces when we have 15 million people unemployed in the OECD countries. It is for this reason that the two must be combined. That is why I am a democratic Socialist and that is why Conservatives are just primeval monsters.

Mr. MacFarquhar

May I press my right hon. Friend on the question of Japan? In view of the widspread reports preceding the arrival of the Japanese Prime Minister can he say whether in bilateral or multilateral talks at the Summit the Japanese Prime Minister confirmed that he would be committing his Government rapidly and drastically to increase its aid giving in the near future or, if not, whether he at least indicated that his Government would be making a public announcement on this matter in the near future?

The Prime Minister

I cannot give an affirmative answer to either of those questions. The Japanese Prime Minister committed himself and his Government to the communiqué. That is as far I can go.

Mr. Stanbrook

Will the Prime Minister now answer the question that he has been asked twice already? In what respects is British Government policy going to be changed as a result of this meeting or is it just another case of pious hopes and meaningless platitudes?

The Prime Minister

I have already answered that question very fully and satisfactorily, namely, that we continue with our existing policies. But what was more important in the case of this conference is that those countries which have set out to grow faster, because they have strong economies, have undertaken and committed themselves so to do and to take further steps if they look like falling short. We have all agreed that there should be monitoring of this process.

The hon. Gentleman should not assume that we are the only country attending to this. It is a common effort. Each country has to put into the deal what it can in order to achieve the world balance that is required. [Interruption.] The hon. Gentleman may snigger about this, [column 912]but that is the truth of the situation. Each of us has a different task to fulfil and we have a different rôle in the economic cycle. Each of us has to do different things.

Apart from that aspect on the economic side, what we discussed, for example, in relation to the developing countries and our relationship with them will be of assistance not only to them but to world recovery as a whole. The impact of the increased oil prices on them has been devastating. That is bound to affect our exports. It is bound to affect world trade. It is these things, which are indirect in our policies, which, if we can ensure that the IMF increases its resources, will, in the end, if we take advantage of the situation, enable our exports to grow. I ask the hon. Gentleman not to dismiss these things but to see them in the round. Let him try to see that the world is interdependent and that what others do may be as important to our economy as what we do ourselves.

Mr. Wrigglesworth

Will the Prime Minister tell the House how progress towards the objectives agreed last weekend will be reviewed—whether any machinery for monitoring progress has been established, or whether another meeting will be held in due course?

The Prime Minister

The progress will be reviewed and monitored, and I hope that the political impetus will be put into the OECD meeting next month and the meeting of the IMF in September. We are all ready, if necessary, to meet again if it seems appropriate to maintain the momentum of the recovery which has begun. We are remaining in touch through our own officials at all times, and it is fairly easy to get people together whenever we think it necessary.

Several Hon. Members

rose——

Mr. Speaker

The House has had a very good run on this, but I shall call three more questions from each side.

Mr. Marten

On the question which the Prime Minister answered from the right hon. Member for Battersea, North (Mr. Jay) about agriculture, does this mean that Her Majesty's Government will implement their policy of importing more food from outside the Common Market, which policy is supported by the Conservative Opposition, and is not [column 913]this, therefore, against that primeval monster, the common agricultural policy?

The Prime Minister

The common agricultural policy needs revision—I have said this constantly—and it is the British Government's policy that it should be revised in our interests. At the same time, as I said in reply to an earlier question, there are big social consequences of such a revision for some of the other members of the Community. Therefore, it will take time to do it. The seven nations agreed yesterday that there should be a mutually acceptable approach to agriculture which will achieve increased expansion and stabilisation of trade and greater assurance of world food supplies. The hon. Gentleman can assume that Canada certainly and the United States probably will be pressing the European Community for more outlets for some of their agricultural produce. I am sure that a bargain will be struck in the end.

Mr. Skinner

Does my right hon. Friend recall that when the leaders met at Rambouillet there were about 1 million people on the dole in this country, that when they met at Puerto Rico another 200,000 had been added to the list, and that the total is now nearly 1.5 million? Do not those figures go to prove that these pious platitudes are not getting people back to work, any more than would the policy put forward by the Leader of the Opposition? In other words, capitalism has not got the answer. The answer is to be found, if my right hon. Friend wants to get down inflation, in freezing prices, if he wants to get people off the dole queue, in restoring the cuts in public expenditure, and, if he wants to do something for Britain, in getting us out of the Common Market?

The Prime Minister

That is a series of slogans which do not bear much relationship to reality.

Mr. Skinner

That is what they are saying on the streets.

The Prime Minister

That may be so. But the hon. Gentleman has a responsibility to give leadership as well as to listen to what people on the streets say.

Mr. Skinner

I am giving it.

[column 914]

The Prime Minister

Freezing prices is not a Socialist remedy. It has been applied in countries in Europe which are by no means Socialist and with the results that we have always known. These problems are more intricate and difficult than the hon. Gentleman seems to think. He has a dual responsibility, as I have. One is to ensure that our people are at work. The second is to preserve freedom in this country. He is a democratic Socialist, and the combination of the two is as important to him as it is to me. I know countries, as he does, where there is no unemployment. There is no freedom, either.

Mr. Rost

Was not the Prime Minister even a little embarrassed or ashamed to be acting as host and to be leading a Government who have dragged this country to the bottom of the league with shameful and disgraceful policies for stagnation, unemployment and inflation? Did he not pick up any tips at all?

The Prime Minister

The only factor which embarrasses me is when the Leaders of other nations have to read in Hansard that sort of comment.

Mr. Swain

In view of the fact that the nuclear energy programme took so long to discuss at the conference, and seeing that it will take 12 months to produce a preliminary report, will not the country's energy needs be in grave danger by the end of the century? Turning to a domestic matter arising from the conference, will the Prime Minister now tell the Secretary of State for Energy to instruct the Central Electricity Generating Board to go ahead with Drax B based on coal-firing?

The Prime Minister

My hon. Friend may have noted that, in my statement, I referred to the agreement that there should be an improved production and use of coal. As regards any specific power station, including Drax, my hon. Friend will know that it is not a shortage of power at present which is causing the hold up in this matter. It is other considerations concerning the future of the power plant industry. But that the power station, when it comes, will be coal-fired, I have no doubt.

Mr. Gow

What advice did the Prime Minister receive from his colleagues about the inflationary dangers of premature [column 915]reflation? Did he take the opportunity last weekend to repeat the undertaking which the Chancellor of the Exchequer gave to the Managing Director of the IMF on 15th December last that a continuing and essential element of Her Majesty's Government's economic strategy was a substantial reduction in the share of resources taken by the public sector?

The Prime Minister

The share of the resources taken by the public sector has, to my regret, been reduced—[Interruption.] Yes, to my regret. It means that a number of essential public needs are not being met. That is why we say that our first task is to overcome inflation so that we may resume non-inflationary growth. That is the order of priorities and the way in which we intend to tackle this task.

Mr. Frank Allaun

What was said about stopping the nuclear and non-nuclear arms race? Is my right hon. Friend aware that many of us who held very high hopes of the President's earlier proposals have been greatly disappointed by his recent actions on this subject? Therefore, what did Britain do at this conference, and what initiative will it take on this issue?

The Prime Minister

The biggest problem that we have is the future of our nuclear fuel and what should be done about that. We all agreed—and my hon. Friend must have heard what I have said about three times already—about the need for a very urgent study of the way to control these matters. As for conventional arms, of course, this was not a negotiating conference for conventional arms, although my hon. Friend will know the position that we have taken on mutual and balanced force reductions. Although I do not wish to commit the President in any way, my hon. Friend is a little premature in his disappointment. The President is undoubtedly quite sincere and convinced about the need for reductions in these areas.

Following is the information:

DOWNING STREET SUMMIT CONFERENCE: DECLARATION

In two days of intensive discussion at Downing Street we have agreed on how we can best help to promote the well-being both of our own countries and of others. [column 916]

The world economy has to be seen as a whole; it involves not only co-operation among national Governments but also strengthening appropriate international organisations. We were reinforced in our awareness of the inter-relationship of all the issues before us, as well as our own interdependence. We are determined to respond collectively to the challenges of the future.

—Our most urgent task is to create more jobs while continuing to reduce inflation. Inflation does not reduce unemployment. On the contrary it is one of its major causes. We are particularly concerned about the problem of unemployment among young people. We have agreed that there will be an exchange of experience and ideas on providing the young with job opportunities.

—We commit our governments to stated economic growth targets or to stabilisation policies which, taken as a whole, should provide a basis for sustained non-inflationary growth, in our own countries and world-wide, and for reduction of imbalances in international payments.

—Improved financing facilities are needed. The International Monetary Fund must play a prominent rôle. We commit ourselves to seek additional resources for the IMF and support the linkage of its lending practices to the adoption of appropriate stabilisation policies.

—We will provide strong political leadership to expand opportunities for trade to strengthen the open international trading system, which will increase job opportunities. We reject protectionism: it would foster unemployment, increase inflation and undermine the welfare of our peoples. We will give a new impetus to the Tokyo Round of Multilateral Trade Negotiations. Our objective is to make substantive progress in key areas in 1977. In this field structural changes in the world economy must be taken into consideration.

—We will further conserve energy and increase and diversify energy production, so that we reduce our dependence on oil. We agree on the need to increase nuclear energy to help meet the world's energy requirements. We commit ourselves to do this while reducing the risks of nuclear proliferation. We are launching an urgent study to determine how best to fulfil these purposes.

—The world economy can only grow on a sustained and equitable basis if developing countries share in that growth. We are agreed to do all in our power to achieve a successful conclusion of the CIEC and we commit ourselves to a continued constructive dialogue with developing countries. We aim to increase the flow of aid and other real resources to those countries. We invite the COMECON countries to do the same. We support multilateral institutions such as the World Bank, whose general resources should be increased sufficiently to permit its lending to rise in real terms. We stress the importance of secure private investments to foster world economic progress.

To carry out these tasks we need the assistance and co-operation of others. We will seek that co-operation in appropriate international [column 917]institutions, such as the United Nations, the World Bank, the IMF, the GATT and OECD. Those among us whose countries are members of the European Economic Community intend to make their efforts within its framework.

In our discussions we have reached substantial agreement. Our firm purpose is now to put that agreement into action. We shall review progress on all the measures we have discussed here at Downing Street in order to maintain the momentum of recovery.

The message of the Downing Street Summit is thus one of confidence:

—In the continuing strength of our societies and the proven democratic principles that give them vitality;

—that we are undertaking the measures needed to overcome problems and achieve a more prosperous future. 8th May 1977.

APPENDIX TO DOWNING STREET SUMMIT DECLARATION

World Economic Prospects

Since 1975 the world economic situation has been improving gradually. Serious problems, however, still persist in all our countries. Our most urgent task is to create jobs while continuing to reduce inflation. Inflation is not a remedy to unemployment but one of its major causes. Progress in the fight against inflation has been uneven. The needs for adjustment between surplus and deficit countries remain large. The world has not yet fully adjusted to the depressive effects of the 1974 oil price rise.

We commit our Governments to targets for growth and stabilisation which vary from country to country but which, taken as a whole, should provide a basis for sustained non-inflationary growth world-wide.

Some of our countries have adopted reasonably expansionist growth targets for 1977. The Governments of these countries will keep their policies under review, and commit themselves to adopt further policies, if needed to achieve their stated target rates and to contribute to the adjustment of payments imbalances. Others are pursuing stabilisation policies designed to provide a basis for sustained growth without increasing inflationary expectations. The governments of these countries will continue to pursue those goals.

These two sets of policies are interrelated. Those of the first group of countries should help to create an environment conducive to expansion in the others without adding to inflation. Only if growth rates can be maintained in the first group and increased in the second, and inflation tackled successfully in both, can unemployment be reduced.

We are particularly concerned about the problem of unemployment among young people. Therefore we shall promote the training of young people in order to build a skilled and flexible labour force so that they can be ready to take advantage of the upturn in economic activity as it develops. All of our Governments, individually or collectively, are taking appropriate measures to this end. We [column 918]must learn as much as possible from each other and agree to exchange experiences and ideas.

Success in managing our domestic economies will not only strengthen world economic growth but also contribute to success in four other main economic fields to which we now turn—balance of payments financing, trade, energy and North/South relations. Progress in these fields will in turn contribute to world economic recovery.

Balance of Payments Financing

For some years to come oil-importing nations, as a group, will be facing substantial payments deficits and importing capital from OPEC nations to finance them. The deficit for the current year could run as high as $45 billion. Only through a reduction in our dependence on imported oil and a rise in the capacity of oil-producing nations to import can that deficit be reduced.

This deficit needs to be distributed among the oil-consuming nations in a pattern compatible with their ability to attract capital on a continuing basis. The need for adjustment to this pattern remains large, and it will take much international co-operation, and determined action by surplus as well as deficit countries, if continuing progress is to be made. Strategies of adjustment in the deficit countries must include emphasis on elimination of domestic sources of inflation and improvement in international cost-price relationships. It is important that industrial countries in relatively strong payments positions should ensure continued adequate expansion of domestic demand, within prudent limits. Moreover these countries, as well as other countries in strong payments positions, should promote increased flows of long-term capital exports.

The International Monetary Fund must play a prominent rôle in balance of payments financing and adjustment. We therefore strongly endorse the recent agreement of the Interim Committee of the IMF to seek additional resources for that organisation and to link IMF lending to the adoption of appropriate stabilisation policies. These added resources will strengthen the ability of the IMF to encourage and assist member countries in adopting policies which will limit payments deficits and warrant their financing through the private markets. These resources should be used with the conditionality and flexibility required to encourage an appropriate pace of adjustment.

This IMF proposal should facilitate the maintenance of reasonable levels of economic activity and reduce the danger of resort to trade and payments restrictions. It demonstrates co-operation between oil-exporting nations, industrial nations in stronger financial positions, and the IMF. It will contribute materially to the health and progress of the world economy. In pursuit of this objective, we also reaffirm our intention to strive to increase monetary stability.

We agreed that the international monetary and financial system, in its new and agreed legal framework, should be strengthened by the early implementation of the increase in [column 919]quotas. We will work towards an early agreement within the IMF on another increase in the quotas of that organisation. Trade

We are committed to providing strong political leadership for the global effort to expand opportunities for trade and to strengthen the open international trading system. Achievement of these goals is central to world economic prosperity and the effective resolution of economic problems faced by both developed and developing countries throughout the world.

Policies on protectionism foster unemployment, increase inflation and undermine the welfare of our peoples. We are therefore agreed on the need to maintain our political commitment to an open and non-discriminatory world trading system. We will seek both nationally and through the appropriate international institutions to promote solutions that create new jobs and consumer benefits through expanded trade and to avoid approaches which restrict trade.

The Tokyo Round of multilateral trade negotiations must be pursued vigorously. The continuing economic difficulties make it even more essential to achieve the objectives of the Tokyo Declaration and to negotiate a comprehensive set of agreements to the maximum benefit of all. Toward this end, we will seek this year to achieve substantive progress in such key areas as:

(i) a tariff reduction plan of broadest possible application designed to achieve a substantial cut and harmonisation and in certain cases the elimination of tariffs;

(ii) codes, agreements and other measures that will facilitate a significant reduction of non-tariff barriers to trade and the avoidance of new barriers in the future and that will take into account the structural changes which have taken place in the world economy;

(iii) a mutually acceptable approach to agriculture that will achieve increased expansion and stabilisation of trade, and greater assurance of world food supplies.

Such progress should not remove the right of individual countries under existing international agreements to avoid significant market disruption.

While seeking to conclude comprehensive and balanced agreements on the basis of reciprocity among all industrial countries we are determined, in accordance with the aims of the Tokyo Declaration, to ensure that the agreements provide special benefits to developing countries.

We welcome the action taken by Governments to reduce counter-productive competition in officially supported export credits and propose that substantial further efforts be made this year to improve and extend the present consensus in this area.

We consider that irregular practices and improper conduct should be eliminated from international trade, banking and commerce, and we welcome the work being done toward [column 920]international agreements prohibiting illicit payments. Energy

We welcome the measures taken by a number of Governments to increase energy conservation. The increase in demand for energy and oil imports continues at a rate which places excessive pressure on the world's depleting hydrocarbon resources. We agree therefore on the need to do everything possible to strengthen our efforts still further.

We are committed to national and joint efforts to limit energy demand and to increase and diversify supplies. There will need to be greater exchanges of technology and joint research and development aimed at more efficient energy use, improved recovery and use of coal and other conventional resources, and the development of new energy sources.

Increasing reliance will have to be placed on nuclear energy to satisfy growing energy requirements and to help diversify sources of energy. This should be done with the utmost precaution with respect to the generation and dissemination of material that can be used for nuclear weapons. Our objective is to meet the world's energy needs and to make peaceful use of nuclear energy widely available, while avoiding the danger of the spread of nuclear weapons. We are also agreed that, in order to be effective, non-proliferation policies should as far as possible be acceptable to both industrialised and developing countries alike. To this end, we are undertaking a preliminary analysis to be completed within two months of the best means of advancing these objectives, including the study of terms of reference for international fuel cycle evaluation.

The oil-importing developing countries have special problems both in securing and in paying for the energy supplies needed to sustain their economic development programmes. They require additional help in expanding their domestic energy production and to this end we hope the World Bank, as its resources grow, will give special emphasis to projects that serve this purpose.

We intend to do our utmost to ensure, during this transitional period, that the energy market functions harmoniously, in particular through strict conservation measures and the development of all our energy resources. We hope very much that the oil-producing countries will take these efforts into account and will make their contribution as well.

We believe that these activities are essential to enable all countries to have continuing energy supplies now and for the future at reasonable prices consistent with sustained non-inflationary economic growth: and we intend through all useful channels to concert our policies in continued consultation and co-operation with each other and with other countries. North/South Relations

The world economy can only grow on a sustained and equitable basis if developing countries share in that growth. Progress has been made. The industrial countries have maintained an open market system despite [column 921]a deep recession. They have increased aid flows, especially to poorer nations. Some $8 billion will be available from the DA for these nations over the next three years, as we join others in fulfilling pledges to its Fifth Replenishment. The IMF has made available to developing countries, under its compensatory financing facility nearly an additional $2 billion last year. An International Fund for Agricultural Development has been created, based on common efforts by the developed OPEC, and other developing nations.

The progress and the spirit of co-operation that have emerged can serve as an excellent base for further steps. The next step will be the successful conclusion of the Conference on International Economic Co-operation and we agreed to do all in our power to achieve this.

We shall work:

(i) to increase the flow of aid and other real resources from the industrial to developing countries, particularly to the 800 million people who now live in absolute poverty; and to improve the effectiveness of aid;

(ii) to facilitate developing countries' access to sources of international finance;

(iii) to support such multilateral lending institutions as the World Bank, whose lending capacity we believe will have to be increased in the years ahead to permit its lending to increase in real terms and widen in scope;

(iv) to promote the secure investment needed to foster world economic development;

(v) to secure productive results from negotiations about the stabilisation of commodity prices and the creation of a Common Fund for individual buffer stock agreements and to consider problems of the stabilisation of export earnings of developing countries; and

(vi) to continue to improve access in a non-disruptive way to the markets of industrial countries for the products of developing nations.

It is desirable that these actions by developed and developing countries be assessed and concerted in relation to each other and to the larger goals that our countries share. We hope that the World Bank, together with the IMF, will consult with other developed and developing countries in exploring how this could best be done.

The well-being of the developed and developing nations are bound up together. The developing countries growing prosperity benefits industrial countries, as the latter's growth benefits developing nations. Both developed and developing nations have a mutual interest in maintaining a climate conducive to stable growth worldwide.