fired power generation, the medium-term impact on the balance of payments has been given no consideration.
At current rates of gas production and, assuming a continuation of recent additions to gas reserves through successful exploration, Britain's gas reserves will last only another 10 years. All gas will then have to be imported. The cost of importing gas (at today's prices) will rise from around pounds 700m this year to pounds 10bn a year in 2002 (following full build-up of gas-fired power generation).
The implications for the balance of payments are so serious that public debate is long overdue. Until recently the Treasury was able to take the view that the balance of payments need not be of central concern to economic policy. This is no longer the case. The recent devaluation of sterling will, by itself, be insufficient to close the present balance of trade deficit over the medium term. An additional pounds 10bn a year deficit will be insurmountable.
European Industrial Forecasting
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