HC Deb 29 July 1975 vol 896 cc1477-8
4. Mr. Gow

asked the Secretary of State for Employment what is his estimate of the extent to which inflation is the cause of the present unemployment.

The Minister of State, Department of Employment (Mr. Albert Booth)

It is not practicable to apportion the present unacceptably high total of unemployed between the various factors which have depressed economic activity here and in other countries.

Mr. Gow

In so far as unemployment may be due to the high rate of inflation, may we take it from the Minister's answer that the level of unemployment may be expected to fall as the rate of inflation falls, as fall it will?

Mr. Booth

The present excessive rate of inflation threatens our creditworthiness as a nation and our ability to compete for our due share of world trade. To that extent it must pose a threat to employment in this country. To the extent that we can overcome it, we should as a nation be able to expand our international trade so as to improve the employment situation.

Mr. Ronald Atkins

Does my hon. Friend agree that there is much glib and inaccurate talk about inflation being the cause of unemployment? Does he accept that unemployment more frequently follows deflation? If we look at the countries of the world with the lowest rates of inflation, it is to be noted that they have the highest rates of unemployment. Would it not be better to invest more money in this country to create employment, and to correct the balance of payments problem by selective import controls and the abolition of the export of capital abroad?

Mr. Booth

My hon. Friend will appreciate that in my original answer I did not accept the proposition that inflation was the only cause of unemployment in this country. I agree that many other factors are involved. However, to the extent that we are a trading nation and are dependent on a level of world trade to invest and to carry out those public activities which have a heavy bearing upon employment in this country, we cannot ignore inflation as one of the factors.