Economic Recovery (Hansard, 13 May 1982)

§ 2. Mr. Knox
asked the Chancellor of the Exchequer whether there have been any further indications that the economy is recovering from the recession.

§ 21. Mr. Dubs
asked the Chancellor of the Exchequer which economic indicators point to a recovery in the economy.

§ The Chief Secretary to the Treasury (Mr. Leon Brittan)
During the second half of last year activity began to recover and profits, excluding the North Sea, rose by one-quarter. Productivity in manufacturing increased by 10 per cent. during last year. The rise in unemployment has slowed markedly and vacancies have increased. The latest CBI survey shows improved business optimism and the expectation of increased orders and output in the coming months.

§ Mr. Knox
Most people believe that the level of unemployment is the main economic problem facing the country. Are there any signs that unemployment will start to fall and, if so, when?

§ Mr. Brittan
The trend in the rise of unemployment that I have described points in the direction that my hon. Friend would rightly wish to see.

§ Mr. Dubs
How much weight does the Minister give to the distinctly more pessimistic views that have recently been expressed by such diverse sources as the International Monetary Fund, Professor Budd of the London Business School and the chairman of ICI?

§ Mr. Brittan
I am not sure which of those views the hon. Gentleman has in mind. The facts that I have given speak for themselves. Perhaps the hon. Gentleman will pay attention to the CBI's recent survey, which paints an extremely optimistic picture for future orders and output. That is a picture that I would prefer to paint.

§ Sir William Clark
Does my right hon. and learned Friend agree that this is proof positive that the Government's economic strategy is working, as any economic indicator that one takes shows that the future holds confidence for an increase in prosperity? Would it not be a good idea if the Opposition ceased to speak in terms of gloom and doom when they receive good news?

§ Mr. Brittan
My hon. Friend is absolutely right. His view is wholly endorsed internationally by the recent communiqué issued by the Group of Ten, which says that a strengthening of fiscal discipline in both the near and medium-term could foster economic recovery by relieving pressure on interest rates. They urged continuing monetary restraint to consolidate and extend gains on inflation". That is international endorsement of a policy that we have been following with increasing success.

§ Mr. James Hamilton
Does the right hon. and learned Gentleman recognise that economic recovery is not happening in Scotland? Is he aware that the Scottish CBI and the Scottish TUC, as well as many industrialists in my constituency and throughout the country, recognise that many liquidations are now taking place and mass redundancies are coming forward? Will the Government now come clean and tell us for a change that they are in no circumstances out of the wood?

§ Mr. Brittan
I entirely understand the difficulties in Scotland and I have no wish to suggest that the recovery that is taking place will be rapid or dramatic. I have never suggested that. Recovery is, of course, uneven and jerky in both time and place, but the general trend that will be seen in coming months cannot be challenged.

§ Mr. Beaumont-Dark
Is my right hon. and learned Friend aware of press reports this morning that the Treasury is rigging its forecasting mechanism? Is he aware that that report has been put around particularly by the TUC because its forecast was so patently wrong? Does he agree that the Chancellor's forecasts are based not on fixed or rigged mechanisms but on facts that may not be everybody's cup of tea?

§ Mr. Brittan
I am grateful to my hon. Friend. I saw the reports. It is wholly without foundation to suggest that the Treasury is rigging matters in that way. The present path of the main economic variables is broadly consistent with the Treasury forecast both last autumn and in the Financial Statement. That is the most telling argument against the absurd and unfounded suggestion of rigging.

§ Mr. Shore
Returning to the main question, would it not be better to treat the House in a more serious way? Is the Chief Secretary aware that the chairman of ICI said only 10 days ago that he could see no signs of industrial recovery? Has anyone actually read the CBI's end-of-April economic report?
What has the Chief Secretary to say about the IMF forecast of a growth rate of 0.8 per cent.? Does he appreciate that with 3 million unemployed the economy did indeed fall down the Everest reached in the summer of 1979, climbed Box Hill in the past six months, but is now going down the other side?

§ Mr. Brittan
The right hon. Gentleman accuses me of lack of seriousness. It is not a sign of levity to disagree with propositions from the Opposition Front Bench. Of course the right hon. Gentleman can quote the people and the forecasts that he has. Even the chairman of ICI is not immune from disagreement. But the facts and figures that I have given show exactly what is happening in the economy. We are not making extravagant claims. The forecast is modest and it is being fulfilled. There is international consensus that the way in which we are proceeding is the right way out of a world-wide recession, and we are moving out of it while other countries continue to experience considerable difficulties.