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Marxist Economist Andrew Glyn reveals:

‘What the City wants’

From North Sea Oil Revenues

(March 1978)

From Militant, No. 395, 3 March 1978, p. 7.
Transcribed by Iain Dalton.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

With all the jubilations from Denis Healey about his ‘financial miracle’ and how we are about to reach the promised land of economic recovery as North Sea Oil flows in, people are beginning to ask where the oil money will actually go.


The January issue of the magazine The Banker reported a survey of the views of a sample of stockbrokers and bankers on the decline of sterling and what should be done with North Sea Oil revenues.

More than three quarters said that the City had suffered from the decline in sterling over the last ten years. They blamed the uncertainty which it caused and also the fact that it reduced the size of UK banks, measured by their assets in comparison with banks in countries whose currencies had risen relative to the pound. This meant a scaling down of the City’s pretensions to world financial dominance.

One third admitted that relaxing exchange controls to allow more foreign investment, a process which the Labour government has already begun and is under strong pressure to step up, would lead to a large outflow of funds.

The most interesting answers, though, were in reply to the following questions:

Question 7

‘Considering the benefits to the balance of payments to be expected from North Sea oil, do you agree that they should be used in any of the ways suggested below?’


Average score

To repay overseas debt


To allow increased investment overseas


To allow further increase in domestic demand


To allow the pound to rise


To build up the official reserves


Question 8

‘Turning to the government revenues from North Sea oil, do you agree that they should be used fro any of the purposes suggested below?’


Average score

To cut personal taxation


To reduce public sector borrowing


To cut corporate taxation


To be directed into British industry


To increase spending on welfare services


Repaying overseas debt and increasing overseas investment were both rated as twice as important as expanding domestic demand to reduce unemployment. This reflects the fear of the bosses that a substantial reduction in unemployment would stoke up inflation and lead to wage claims which would jeopardise the recent recovery of profits.

The City does recognise the necessity of a strong industrial base for their financial operations: ‘directing’ oil revenues into British industry was rated as an important priority, and a quarter of those asked also felt that the government should try to hold the pound down, presumably to increase industrial competitiveness.

Of course their ideas of ‘directing’ probably involve greater handouts from the government in the form of investment grants etc. Obviously any realistic ‘direction’, that is nationalisation of the banking sector and the major industrial monopolies to ensure that extra funds made available actually were invested, is far from what these financiers have in mind!


Any thought that they might be going soft in the defence of their interests is corrected by their attitude to public spending. Cutting corporation tax and reducing public sector borrowing is evidently at least fifteen times as important to them as increasing public spending on the welfare services. For these well-heeled gentlemen who send their kids to private schools and can afford the privilege of private medicine such things as free education, the NHS, council housing etc., are just a waste of money!

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Last updated: 3 November 2016