Inflation (Hansard, 25 October 1973)

§ 16. Mr. Adam Butler
asked the Chancellor of the Exchequer how the rate of inflation in the United Kingdom so far this year has compared with that of each of the EEC countries and of the United Kingdom's other main industrial competitors; and if he will list the comparative figures both for wholesale and retail prices in the OFFICIAL REPORT.

§ Mr. Nott
In the 11 major countries considered, the rate of inflation ranges from 5½ per cent. to 16 per cent. for retail prices and 3¾ per cent. to 35 per cent. for wholesale prices. The United Kingdom, at 8 per cent., suffered the lowest rate of inflation of wholesale prices of all countries except Belgium, and at 8¾ per cent. for retail prices it had approximately the same rate of inflation as France and a lower rate than Canada, Denmark, Italy, Ireland and Japan. I will list the comparative figures in the OFFICIAL REPORT.

§ Mr. Butler
Does not that statement confirm what Opposition Members have refused to recognise, namely, that inflation is a world-wide phenomenon and that most countries are worse hit than ourselves? Further, does it confirm that the Government's prices and incomes policy has been successful, particularly with regard to wholesale prices?

§ Mr. Nott
Yes, Sir. It certainly shows that. The United Kingdom was suffering 1461 one of the highest rates of inflation amongst advanced industrial countries in November 1972 when stage 1 of the counter-inflation programme began. We now have one of the lowest rates of inflation. Stage 3 is designed to continue that success.

§ Mr. Skinner
If we are doing so well compared with our competitors in the EEC countries, why is it that the hon. Gentleman's Department told me in an answer this week that the balance of trade between the United Kingdom and its main competitors in Europe is running at a deficit of £1,400 million? If we are doing so well, why have we that deficit? Why is it that the United Kingdom is the country which is running its rate of exchange at 18 per cent. below the Smithsonian average when the other countries are above it, or just below it?

§ Mr. Nott
The hon. Gentleman will appreciate that there have been few years during the last 150 years when this country has not run a deficit in its visible trade. He must take into account as well the invisible payments. The figures show that our trade with Europe is increasing fast in volume terms. I believe that that will continue. Now that the value of the pound has changed in relation to some of the European countries, that gives our exporters additional benefit and advantage.

§ Mr. Wyn Roberts
Will my hon, Friend say what steps and initiatives have been taken by his right hon. Friend to get concerted action taken within the EEC to counter inflation?

§ Mr. Nott
Yes, Sir. There have been several meetings of the Finance Ministers of the EEC to consider concerted action against inflation. I am sure that the Council of Ministers and Finance Ministers will meet again to discuss that important issue.

§ Mr. Brian Walden
Should not the hon. Gentleman share with us his thoughts about all the bogus elements in this planted Question? I shall direct his mind to three such elements. First, is it not nonsense to take one year of inflation in any group of countries without stating the base figure from which one starts? If we took a five-year period, would we not get a different result? Second, is it 1462 not a fact that wages in the EEC countries, except Holland, have risen dramatically faster, on any computation, specifically or generally, than they have in this country? In Belgium, the only country with a lower rate of inflation than this country on the chart from which the hon. Gentleman has quoted, there has been a threefold increase in wages—[HON. MEMBERS: "No."] Yes. Hon. Members may care to consider the EEC figures. Finally, if we consider one of the best of all tests—namely, the valuation of currencies against each other—is not our record absolutely appalling under this Government?

§ Mr. Nott
First, I answered the Question that was tabled. It is entirely false to say that it was planted, in any way. It happens that I have not spoken to my hon. Friend the Member for Bosworth (Mr. Adam Butler) for four months. Secondly, wages certainly have been rising in all the EEC countries. If the hon. Member for Birmingham, All Saints (Mr. Brian Walden) would like to table a Question about that, I shall give him the precise details. Further, we have already dealt with the movement of currencies in an earlier Question. There has been a shift in currency relationships and currency values relative to one another. Those relationships are changing every day.

	per cent.
Belgium	5½
Germany	6¾
Netherlands	7¼
USA	7¾
France	8¼
United Kingdom	8¾
Canada	9
Denmark	12¼
Italy	12¾
Ireland	14¼
Japan	16½