PESC in Reflation: 1962–63

Very soon after the Chancellor had made his expenditure and investment statement on 27 February 1962, the pressure for reflationary action began to build up again. Mr Selwyn Lloyd made no concession to this in his Budget speech on 9 April, but in the next few weeks it became insistent. The Prime Minister, as in 1958, was in the lead in this and, writing of this period, records:

1

I had been continually pressing on the Chancellor of the Exchequer and the Treasury the need for a substantial reflation…. On 8th March 1962 Bank Rate was reduced from 6 to 54 per cent. But I was not satisfied and kept pressing for further expansionist moves. On 22nd March, Bank Rate came down to 5 per cent, and to my great delight the Treasury and the Bank agreed to a further reduction to 41/2 per cent on 16th April…. I was also anxious for the system of Special Deposits to be modified with a corresponding increase of the total sums available for credit: this was done on 31st May when £70 million of these deposits were released.