LONDON: The Government on Wednesday [Oct 3] announced a huge gold and dollar deficit of 638 million dollars for the three months ending Sept 30 and left the decision whether to waive interest payment on the American loan to the winner of this month’s general election. The third quarter British dollar deficit was worse than even the most pessimistic estimates. It was the largest quarterly dollar deficit since the end of 1947 and cut the gold and dollar reserves of the UK and of the sterling area from 3,867 million dollars to 3,269 million dollars.

Labour Chancellor of the Exchequer, Hugh Gaitskell, announced the figures showing the great seriousness of the British financial position at a banquet in his honour in the City of London. The Treasury released the formal figures on the deteriorating dollar position and the reappearance for the first time since the end of 1949 of the dreaded “dollar gap”.

Gaitskell told the bankers that in view of the serious position now the Government — Labour or Conservative — should make the decision on whether to ask the USA for a waiver on interest payment on the 1947 American loan.

Published in Dawn, October 4th, 2026