HC Deb 11 November 1982 vol 31 c663
18. Mr. Knox

asked the Chancellor of the Exchequer whether there have been any further signs that the economy is recovering from the recession.

Sir Geoffrey Howe

Although output has been flat this year, it remains higher than in the first half of last year. Manufacturing productivity continues to rise strongly and industrial companies' profits are recovering. Bank base rates are now down seven points since last September and inflation is forecast to fall to 5 per cent. next year. The Industry Act forecast shows a rise in United Kingdom output of about 1½ per cent. in 1983.

Mr. Knox

If my right hon. and learned Friend thinks that there are signs of economic recovery, why is unemployment not falling? Why does my right hon. and learned Friend not expect it to fall in the future?

Sir Geoffrey Howe

Because, as the hon. Gentleman knows—

Mr. William Hamilton

Hon. Friend.

Sir Geoffrey Howe

Because, as my hon. Friend knows, a change in the rate of increase of unemployment comes later in the process of recovery rather than earlier.

Mr. Horam

Does the Chancellor of the Exchequer believe that his economic policies have no effect on the level of demand in the British economy?

Sir Geoffrey Howe

Plainly, economic policies have an effect on the level of demand overall, but, as many hon. Members have said, it is not the level of demand that is the key to the improved performance of our economy, but our capacity to supply on competitive terms in a way that is likely to meet that demand.