Economic Performance

HC Deb 23 March 1978 vol 946 cc1724-6

6. Mr. Dykes

asked the Chancellor of the Exchequer to what extent the United Kingdom's economic performance is overstated by better financial statistics rather than characterised by any real term progress at the present time.

Mr. Joel Barnett

The tremendous improvement in our financial position and the basis that this gave us for improvement in the real economy was recognised world-wide six months ago. Since then, the stimulus of the measures my right hon. Friend announced on 26th October has begun a progressive expansion of demand.

Mr. Dykes

May I not thank the right hon. Gentleman for the propaganda but ask him to agree that no significant recovery of the British economy is possible, beyond perhaps a marginal improvement this year and next year, because the rate of growth of gross domestic product needed materially to reduce unemployment is well ahead of any target rate of growth that the Government have envisaged for this year or 1979?

Mr. Barnett

I do not accept that. I do not know how the hon. Gentleman can make that statement without looking at what has been happening. In the past six months there has been—I am sure that the hon. Gentleman has welcomed it—a regular and steady fall in the level of unemployment. We want to see a much better rate of economic growth and growth of GDP in the coming year, and I expect that that will happen. I am sure that the hon. Gentleman will look forward with interest to the remarks of my right hon. Friend in his Budget Statement.

Mr. David Steel

I do not minimise the serious economic problems that still lie ahead, but is it not right that today, the anniversary of the Lib-Lab pact, we should mark the fact that the rate of inflation—the serious matter facing us a year ago, when the monthly rate was equivalent to nearly 20 per cent, in annual terms—is now satisfactorily down and we are in a position at least to tackle these serious problems?

Mr. Barnett

I am happy to mark the anniversary, and I note as the right hon. Gentleman does, with great interest the enormous improvement in our economic position over the past 12 months.

Sir G. Howe

Is it not equally right, just after the fourth anniversary of this Labour Government, to mark the fact that production in British manufacturing industry is still lower than it was four years ago, when this Government came to office—a disastrous record unequalled in any other country like our own anywhere else in the world?

Mr. Barnett

Even that is not strictly true, as the right hon. and learned Gentleman will see if he looks at the growth of GDP from the first quarter of 1974 to the latest comparative figures for the third quarter of 1977. We compare with many other countries, including West Germany. We are better than Italy. West Germany's growth has been very poor in the past four years. It is remarkable that the right hon. and learned Gentleman is not prepared to recognise the reality, but he will have many more years in Opposition to get used to it.

Mr. Rifkind

When the right hon. Gentleman is claiming to have got inflation under control, should he not have the grace to admit that it was under his supervision that it went out of control?

Mr. Barnett

I am always ready to be gracious on all kinds of matters, but the responsibility for the growth of inflation four years ago rests with the hon. Gentleman's party, and he knows it.