Economic Growth (Hansard, 23 January 1973)

§ 2. Mr. William Hamilton
asked the Chancellor of the Exchequer what progress has been made towards an annual growth rate of 5 per cent.

§ 10. Mr. Eadie
asked the Chancellor of the Exchequer if he is satisfied that his target of 5 per cent. economic growth in the economy is being achieved; and if he will make a statement.

§ 13. Mr. Norman Lamont
asked the Chancellor of the Exchequer what estimate he has made of the effect of the Government's anti-inflation policy on the 5 per cent. per annum growth target.

§ The Chancellor of the Exchequer (Mr. Anthony Barber)
The latest indicators of demand and output and the falling trend in unemployment suggest that the economy is now growing at a rate broadly consistent with the Budget forecast. Success in reducing the rate of inflation will make it easier to sustain a rapid growth rate.

§ Mr. Hamilton
Is not the Chancellor aware that some experts take a contrary view and that some of them are very pessimistic about the present position? Will he give a forecast about the balance of payments deficit for the year arising out of the consumer-led boom which we are now experiencing? Will he explain the reluctance of private investors to invest?

§ Mr. Barber
There are other Questions on the Paper concerned with the balance of payments. The Questions now before us deal with growth. There is plenty of evidence to show that the economy is now growing at around the rate which I forecast in the Budget. Industrial production, for example, which is a very important indicator, was nearly 6 per cent. higher in the three months to November than a year earlier. Retail sales are 6 per cent. higher than a year ago and new car registrations are more than 15 per cent. higher. Unemployment on a seasonally-adjusted basis has fallen by 173,000 since March.

§ Mr. Bruce-Gardyne
in the event of an apparent conflict between the objective of a 5 per cent. growth and the objective of the abatement of inflation, which would have the greater priority?

§ Mr. Barber
I do not believe that the policies we are pursuing are producing any inconsistency whatever.

§ Mr. Healey
Is it not the case that the welcome increase in growth in recent months has been largely because Government policies last year increased consumption about three times as fast as national wealth, and was not this one reason for the very heavy deterioration in our balance of payments? Is it not also the case that under the Government's proposals for the coming year consumption will increase at only about one-third of the rate at which they hope to increase national growth? What does the Chancellor propose to do to ensure that the welcome growth we can see at the moment is maintained for the next two years, as the Prime Minister promised the other day?

§ Mr. Barber
One of the main reasons for introducing the measures announced by my right hon. Friend last Wednesday, which I hope will have the support of the Opposition in the national interest, was to be able to maintain a more rapid growth rate. I am, however, a little surprised that anyone who supported the Labour Government's policies of restriction and economic stagnation should criticise the present Government on anything to do with the growth rate. The previous Government deliberately held back the growth of the economy to an average rate of less than 2 per cent. a year. It was a disastrous policy and, what is more, the Opposition know it.