HC Deb 27 June 1972 vol 839 cc1181-2
16. Mr. William Hamilton

asked the Chancellor of the Exchequer to what extent his Budget forecasts in relation to prices, incomes, production and investment are on target; and if he will estimate the rate of growth in the economy over the next nine months.

Mr. Higgins

It is not the practice to provide forecasts of prices and incomes, nor is it usual to give estimates of the rate of growth of the economy other than at the time of the Budget. As to investment and output, it is too early to make a detailed assessment of developments in the economy in the first half of this year, but the Budget forecast allowed for a fall in domestic product in the first quarter and the latest indicators of demand and activity appear consistent with the central forecast made at the time of the Budget which covered the 18 months to the first half of 1973.

Mr. Hamilton

I am not sure what that gobbledegook means, but if it means that the Government are on target, does that mean that the measures announced last Friday were planned in June, 1970, and that this was the climax of the Conservative Party's "Better Britain"? Will the hon. Gentleman say what were the reactions of the Ministers in Luxembourg yesterday, apart from the snide remark of the Chancellor just now about my right hon. Friend the Member for Leeds, East (Mr. Healey) when clearly my right hon. Friend was reflecting—[HON. MEMBERS: "Question."]—the effects of the Government's policies rather than the causes of them?

Mr. Higgins

The second part of the hon. Gentleman's question was answered by my right hon. Friend a few moments ago. The first part was answered by my right hon. Friend last Friday.

Mr. Bruce-Gardyne

My right hon. Friend the Chancellor confirmed on Friday, and again today, that the containment of inflation was our first priority. May we take it that, if need be, such other desirable objectives as the achievement of a particular rate of growth or a particular rate of reduction in unemployment will take second place to this objective?

Mr. Higgins

One must look at the overall economic policy as a whole. Certainly my right hon. Friend made absolutely clear the great importance we attach to the question of inflation.—[Interruption.] I am answering the question, if hon. Gentlemen will listen. The recent unemployment figures have been extremely heartening. On the subject of economic growth, my right hon. Friend has pointed out what our proposals are. One should not overlook the fact that a faster rate of economic growth and greater production may itself be a very important weapon in fighting inflation. That is why we believe that my right hon. Friend's Budget judgment was right, that we must achieve a faster rate of economic growth because the relationship between production and prices is a very obvious one which the House will understand. Therefore, one must not assume that there is any inconsistency between the achievement of these various objectives.

Dr. Gilbert

As the initial result of any downward movement in the exchange rate is usually inimical to the balance of payments, has the hon. Gentleman made an estimate of the result of last week's activities on the Budget forecasts? Furthermore, as European estimates of the severe effect of our coming entry into the Market had an impact on European opinion and helped to move the rate, with what additional burdens shall we now be faced as a result of the dribbling devaluation of the last few days?

Mr. Higgins

I do not accept the hon. Gentleman's final adjectives. As my right hon. Friend pointed out a few moments ago, it is too early to make a statement and we must wait and see how the situation develops.