§ 8. Mr. Nelsonasked the Chancellor of the Exchequer what assumption he made about the trend in levels of real interest rates when forecasting 2 per cent, growth in output in the current year in his Budget statement.
§ The Minister of State, Treasury (Mr. Barney Hayhoe)It is not Treasury practice to publish interest rate forecasts.
§ Mr. NelsonDoes my hon. Friend agree that interest rates in Britain are far too high compared with inflation and the average rate of return on capital employed? As sterling has recently improved its exchange value, can Britain look forward to early reductions in the minimum lending rate?
§ Mr. HayhoeLike my hon. Friend, I wish to see interest rates falling. Lower interest rates help industry, and I welcome the recent falls. I trust that, with the continued responsible financial policies of the Government, progress will be made regarding inflation and lower interest rates.
§ Mr. JayIs the Minister aware that real interest rates are much too high and that if the Government had not abandoned exchange control they would be a good deal lower?
§ Mr. HayhoeI am by no means sure that what the right hon. Gentleman says is true. Those who seek to forecast interest rates often come a cropper. I have little confidence in the presumed forecast that the right hon. Gentleman is making.