Consumption (Hansard, 27 April 1978)

§ 6. Mr. Alan Clark
asked the Chancellor of the Exchequer at what percentage rate he expects consumption to be rising in the second and third quarters of the current year.

§ The Minister of State, Treasury (Mr. Denzil Davies)
My right hon. Friend's forecast of the economy, published in table 5 of the Financial Statement and Budget Report, suggested that the real value of personal consumption in the second half of the year would be 5 per cent. to 6 per cent. higher than a year earlier. Forecasts of individual quarters are not published.

§ Mr. Clark
But is it not the case that in the Budget Report, in projecting the figures for consumption and also the critically related figures for imports, the Treasury has abandoned the use of its own model and has preferred to rely on the middle range of views of a number of economic forecasters—to use its own language? Doubtless this includes astrologers as well as Greek scholars, but why has the substitution been made?

§ Mr. Davies
I am always glad to hear that the Treasury from time to time abandons some of its models. I think that the point that the hon. Gentleman was trying to make was that there is a danger that when an extra amount of money is put into the economy, some of that will go into imports. This we accept, partly because our industry has not been able to compete as well as it should with the industries of our competitor countries.

§ Mr. Ron Thomas
Given the fact that, if we deduct the cost of fuel, two-thirds of our import bill is now made up of finished and semi-finished manufactured goods, will my right hon. Friend give us an indication or guesstimate of how much of this increased consumption will find its way into the import of finished and semi-finished manufactured goods? Will he, even at this late hour, consider introducing selective import controls on those goods?

§ Mr. Davies
As to the amount of money that will go into imports, the October measures and the Budget measures in April meant about £3,000 million extra personal spending power. Of that amount, in 1978–79, the estimates—I agree that "guesstimates" might be a better word—are that about £500 million to £700 million will go into imports. That is not just semi-manufactured and manufactured goods but all imports. That is the kind of proportion in 1978–79.