HC Deb 04 June 1981 vol 5 cc1062-3
11. Mr. Newens

asked the Chancellor of the Exchequer if he will make a statement on the present level of interest rates.

Sir Geoffrey Howe

Minimum lending rate has been reduced by 5 per cent. since last summer to its present level of 12 per cent. United Kingdom short term interest rates are now among the lowest in the industrialised countries.

Mr. Newens

Yes, but do not international pressures, which are at present being manifested by a rise in British interest rates, demonstrate the tendency of monetarism, and competitive monetarist policies pursued by different States, to plunge our economy, which is already depressed, into further depression? Will the Chancellor now give a categoric assurance to the House that he will resist any pressure for a rise in interest rates, whatever may be the messages that he receives from Friedmanite oracles?

Sir Geoffrey Howe

It is not my practice to make predictions about interest rate developments or to comment on speculation of any kind, and still less to give pledges of the kind urged upon me by the hon. Gentleman. However, if we were to suffer the imposition of the £5 billion increase in borrowing that would follow from amendments moved by the Labour Party, and to suffer the £10 billion increase in the borrowing requirement urged by the Deputy Leader of the Opposition, each of those things would be a prescription for soaring interest rates.

Mr. Adley

As interest rates are falling in this country while they rise in most of our industrial competitor countries, and as inflation is falling here while it is rising in most of our competitor countries, has my right hon. Friend any idea what it is about these facts that the Opposition find so objectionable?

Sir Geoffrey Howe

I cannot understand it and I share my hon. Friend's sense of mystification.

Mr. Jay

To be fair to the Chancellor, if the object of his policy has been to reduce production and investment and to increase unemployment and damage British industry, has not he been outstandingly successful?

Sir Geoffrey Howe

The right hon. Gentleman's question and his judgment of fairness do less than credit to him.