§ 3.30 p.m.
§ The Chancellor of the Exchequer (Mr. Denis Healey)With permission, Mr. Speaker, I wish to make a statement.
Since the House debated the economic situation in July, the improvement in our financial position has been greatly strengthened. Confidence in Britain's future has been powerfully reinforced both at home and abroad. As a result we are now in a position to take further measures to improve the outlook for employment and to bring the growth of output on to its intended path.
It is now clear that both in the United Kingdom and in the world as a whole the recovery in demand and activity is weaker than was expected in the summer. The latest meetings of the International Monetary Fund and of the Finance Council of the European Community have agreed that the industrialised world should take steps to stimulate demand and that Britain is in a position to join in this collective effort.
The Government have made it clear that they aim at a steady and sustained expansion and are determined to avoid the risk of over-heating the economy with the damaging consequences for growth, inflation and the balance of payments which we saw four years ago. For this reason the decisions I shall now announce are part of a programme for economic expansion spreading over 18 months. Our main objective must be a continuing fall in the level of unemployment. In framing measures to this end the Government have been guided by four main considerations. The measures should be quick-acting, they should reinforce the attack on inflation and assist the industrial strategy, they should be fully consistent with our financial commitments for the current year and they should run no risk of over-extending our finances in 1978–79 or of unnecessarily prejudicing the possibility of further measures in the next spring Budget.
Our basic economic strategy remains as I described it in my March Budget. I now see scope for measures within the framework of that strategy costing a little over £1 billion in the current year and £2 billion in the next financial year.