HC Deb 13 May 1982 vol 23 cc940-1
14. Mr. Neubert

asked the Chancellor of the Exchequer to what extent expenditure on the Falkland Islands action is a factor in his latest assessment of the prospects for single figure inflation as an annual rate.

Mr. Brittan

At the time of the Budget we forecast a year-on-year rate of inflation of 9 per cent. by the fourth quarter of 1982. The subsequent Falkland Islands operation has given no grounds for modifying that forecast.

Mr. Neubert

Will my right hon. and learned Friend give the House a renewed assurance that whatever the cost of resecuring and defending our sovereign territory in the Falkland Islands, it will not deflect the Government from their economic strategy? Will my right hon. and learned Friend confirm that with the prospect of single figure inflation so close, it remains the Government's overriding objective to reduce the level of inflation to that of our international competitors?

Mr. Brittan

I am happy to give the House that confirmation. I assure my hon. Friend and the House that cost is not a limiting factor of the operation, but the cost of that operation will be financed in a way that is consistent with our economic strategy. It is only because of the basic financial strength of the country as a result of the policies that we have carried out that it is possible to mount such an operation without there being an adverse effect on the value of the pound or interest rates.

Mr. Campbell-Savours

Will the Chief Secretary give an assurance to the House that the Government will not use the Falkland Islands as an excuse for any difficult economic indicators that arise over the next few months?

Mr. Brittan

The hon. Gentleman must not judge the Government by his own standards.