Recession (Economic Indications) (Hansard, 15 July 1982)

§ 2. Mr. Deakins
asked the Chancellor of the Exchequer what indicators now lead him to believe that the recession is ending.

§ The Chancellor of the Exchequer (Sir Geoffrey Howe)
Industrial production in the three months to May was about 3 per cent. higher than in the spring of last year. The prospect is for further gradual recovery. This is supported, for example, by the central statistical office's index of leading cyclical indicators, and by most recent independent forecasts.

§ Mr. Deakins
Are there any signs of increased job opportunities in British industry to combat the present disastrous levels of unemployment?

§ Sir Geoffrey Howe
There are two foundations upon which the prospects of improved employment are to be built. One is the continued success against inflation, and the second is the improvement in output that is likely to follow that. All our policies are directed to that end.

§ Mr. Richard Wainwright
Is the Chancellor aware that his own central statistical office states that the figures to May are incomplete until we have the June figures, partly because of this year's exceptional incidence of the spring bank holiday and, secondly, because of the frenzied industrial activity due to the Falklands crisis?
With regard to the ending of the recession, what is the Chancellor's reaction to the recent surge in imports due to the sabotaging of the home industrial sector?

§ Sir Geoffrey Howe
I agree that the surge in imports is to be regretted. That is a consequence of the continued lack of competitiveness of Britain's economy, which has nevertheless made substantial improvements in recent months. It is also aggravated by continued examples of industrial unrest.
It is because the figures for one month are not representative that. I founded my answer on industrial production in the three months to May, which was 3 per cent. higher than it was in the spring of last year.

§ Mr. Rippon
Does my right hon. and learned Friend believe that the record number of bankruptcies in the first six months of this year, mostly among small businesses and largely due to high interest rates, suggests that the recession is ending?

§ Sir Geoffrey Howe
I understand my right hon. and learned Friend's anxiety about the record level of bankruptcies, which is not confined to this country. He rightly draws attention to the importance of lower interest rates in improving prospects for small businesses as well as others. As a result of the Government's economic policies interest rates are now 4 per cent. lower than at the end of last year.

§ Mr. Straw
On 30 July 1981 the Chancellor of the Exchequer told an incredulous House that the recession was at an end. Is the right hon. and learned Gentleman aware that in the past 12 months—not three months—manufacturing production slumped still further and has only recently returned to the level of last July? With the right hon. and learned Gentleman's track record of predictions, the House and the country would do far better to take notice of people such as the chairman of the Yorkshire and Humberside CBI, who last Saturday said that the economy was as dead as a dodo.

§ Sir Geoffrey Howe
It would not be right to take that view of the economy. Economic growth in Britain, as in every country, is still slow and hesitant. Economic growth in some European countries is static or negative. However, the OECD, which is an international observer of the scene, stated in its most recent forecast that output growth in Britain is likely to be about 1¼ per cent. this year and slightly higher than that next year. That is close to our forecast, and it is one that is confirmed by the majority of independent outside forecasts. What is more important is that the OECD's forecast represents an upward revision of its earlier forecast at the end of last year.