CROWD OUTSIDE 10 DOWNING STREET; MR. MARSH, MINISTER FOR POWER, LEAVING; MR. HEALY, DEFENCE MINISTER, AND MR. GEORGE BROWN, FOREIGN MINISTER, LEAVE; MR. SHORE, ECONOMIC SECRETARY, LEAVING; CROWD OF BROKERS OUTSIDE STOCK EXCHANGE IN LONDON'S THROGMORTON STREET; INTERVIEW WITH STOCK BROKER (SOF): STOCK EXCHANGE IN AMSTERDAM, HOLLAND; STOCK EXCHANGE IN MADRID, SPAIN; VARIOUS IMPORTED FOODS ON DISPLAY IN LONDON.



REPORTERS: "CAN YOU TELL ME WHY YOU CAME DOWN THIS MORNING?"



BROKER: "WELL, BECAUSE WE HAVE A NORMAL MONDAY MORNING POST ANYWAY AND WE KNOW, OF COURSE, THERE IS NO TRADING. I CAN'T UNDERSTAND WHY THERE ISN'T ANY TRADING, ALTHOUGH THE SITUATION IS SERIOUS AND THE INDEX WILL DROP - OBVIOUSLY DROP - INDUSTRIALS WILL DROP - I FEEL THAT THEY SHOULD HAVE HAD TRADING EVEN IF PRICES WERE ONLY NORMAL."




Initials RM/V-VS/AS/OS



Script is copyright Reuters Limited. All rights reserved

Background: TRADING WAS SUSPENDED ON THE LONDON STOCK EXCHANGE TODAY (MONDAY) FOLLOWING DEVALUATION OF THE POUND STERLING, BUT IN OTHER MAJOR WORLD CENTRES WHERE TRADING WAS ALLOWED SHARE PRICES FELL AND THERE WAS MUCH CONFUSION. BY TONIGHT, ONLY 10 COUNTRIES HAD ALSO ANNOUNCED DEVALUATION OF THEIR CURRENCIES, AND NONE OF THEM IS A MAJOR COMPETITOR OF BRITAIN IN THE INTERNATIONAL MARKETS.

THE CHANCELLOR OF THE EXCHEQUER, MR. JAMES CALLAGHAN, DEFENDED THE GOVERNMENT'S DECISION TO DEVALUE THE POUND WHEN HE ADDRESSED PARLIAMENT TODAY. UNEXPECTEDLY, HE RECEIVED STRONG SUPPORT FROM ALL FACTIONS OF THE GOVERNMENT LABOUR PARTY IN PARLIAMENT IN THE FACE OF EQUALLY STRONG CRITICISM FROM THE OPPOSITION. MR. CALLAGHAN WENT TO THE HOUSE OF COMMONS FROM 10 DOWNING STREET, THE LONDON RESIDENCE OF THE PRIME MINISTER, WHERE CABINET MEMBERS HAVE BEEN MEETING TODAY.

NOT ONLY WAS LONDON'S STOCK EXCHANGE, IN THROGMORTON STREET, CLOSED TODAY BUT A BAN HAD ALSO BEEN PLACED ON UNOFFICIAL DEALINGS OUTSIDE THE BUILDING. NEVERTHELESS, A LARGE CROWD OF BROKERS GATHERED OUTSIDE THE BUILDING AT THE NORMAL OPENING TIME, BUT THERE WAS NO BUSINESS AND BY MID-MORNING THEY HAD ALL DRIFTED AWAY. ONE OF THE BROKERS WAS INTERVIEWED BY A REPORTERS OF THE BRITISH BROADCASTING CORPORATION......
A TOTAL OF 34 NATIONS, INCLUDING THE UNITED STATES, JAPAN, THE SIX EUROPEAN COMMON MARKET COUNTRIES, AUSTRALIA AND SOUTH AFRICA, HAVE ALREADY ANNOUNCED THEY WILL STAND ON THE PRESENT VALUE OF THEIR CURRENCIES. THIS WILL ENABLE BRITAIN TO ACHIEVE THE MAXIMUM ADVANTAGE FROM DEVALUATION IN TRADING WITH THESE COUNTRIES - WHERE BRITAIN'S EXPORTS WILL BE CHEAPER TO BUY THAN BEFORE. BUT IT ALSO MEANS THAT BRITAIN WILL HAVE TO PAY MORE FOR IMPORTS FROM THESE COUNTRIES.

ONE OF THE COUNTRIES THAT HAS ALSO DEVALUED ITS CURRENCY IS SPAIN, WHICH DEVALUED THE PESETA BY 16.6 PER CENT FROM 60 TO 70 PESETAS TO THE UNITED STATES DOLLAR. THE GOVERNMENT ISSUED A STATEMENT SAYING IT WAS DEVALUING BECAUSE OF "THE CERTAIN EFFECT" THAT THE BRITISH GOVERNMENT'S MOVE WOULD OTHERWISE HAVE ON SPAIN'S FOREIGN TRADE AND TOURISM. THE PESETA WILL REMAIN AT THE EXCHANGE RATE OF 168 PESETAS TO THE POUND STERLING.

THE MAIN DISADVANTAGE TO BRITAIN FROM DEVALUATION WILL BE AN INEVITABLE RISE IN PRICES FOR GOODS IMPORTED FROM COUNTRIES WHICH ARE NOT DEFLATING THEIR CURRENCIES. THE BIGGEST RISES ARE EXPECTED TO BE IN IMPORTED FOODSTUFFS. THE PRICE OF PETROL IS ALSO EXPECTED TO GO UP, NOT ONLY BECAUSE OF DEARER OIL BUT ALSO COSTLIER SHIPPING RATES.