Balance of Trade

HC Deb 16 November 1983 vol 48 cc837-9

8. Mr. Leighton

asked the Secretary of State for Trade and Industry if he will give the current balance of trade in manufactures for the past 12 months with the rest of the European Community.

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont)

Since the second quarter of 1979 there has been a total deficit on trade in manufactures with the other countries of the European Community of £15.1 billion and a surplus with the rest of the world of £28.7 billion. In the year ending September 1983 there was a deficit on manufacturing trade with the Community of £6.4 billion.

Mr. Leighton

In view of the first speech of the new director of the National Development Council, in which he said that every £35,000 worth of manufactured imports represented one lost job in this country, can the Minister estimate how much unemployment has been caused in Britain by the appalling deficit that he has just announced?

Mr. Lamont

It is wrong of the hon. Gentleman to concentrate on one section of the current account. We must take into account exports of services and oil as well, and we have a considerable surplus there. Furthermore, we have had a large current account surplus—one of the largest in the world—in the last two years. The hon. Gentleman must not look at one sector alone.

Sir Anthony Meyer

Is it not traditional and in no way alarming for the United Kingdom to run a balance of payments deficit with manufacturing countries? Is it not also the case that in our trade with the EC our exports are better covered by imports than they are with other large manufacturing blocs, the United States and Japan?

Mr. Lamont

It is true that in terms of visible trade in about only six of the last 37 years have we been in surplus. The trend that the hon. Member for Newham, North East (Mr. Leighton) has identified applies not just to EC countries but to our trade with many advanced industrialised countries. Deficits in one area are the counterpart of surpluses elsewhere, and we have been a strong surplus area. Labour Members should remember that they have changed their policy; they used to be against the EC, but now we are told that their policy is different. We should like to know what it is. Is it a fundamental renegotiation or just a fundamental fudge?

Mr. Janner

Does the Minister appreciate that areas such as Leicestershire, which, alas, have no oil, have depended on the manufacturing sector to provide jobs for their people, and that the collapse of industry and employment in such areas as my city have resulted directly from Government policy? What, if anything, is he prepared to do about it?

Mr. Lamont

I cannot see, if the hon. and learned Gentleman is implying withdrawal from the EC, how that would be the answer to his problems. The EC has been the fastest growing area for our exports—37 per cent. of our manufacturing exports go to the EC. Unemployment in the hon. and learned Gentleman's constituency is well below the average for the EC as a whole.

Mr. Batiste

Does my hon. Friend accept that were Britain to withdraw from the Common Market that would result in the most catastrophic loss of jobs in manufacturing industries, particularly in my region of Yorkshire and Humberside?

Mr. Lamont

I agree with my hon. Friend. An extremely important aspect is inward investment. Much of the inward investment that is made by multinational and American companies in this country is important for jobs, but it would not take place unless those investors had access to a guaranteed market of 270 million people.

Mr. Shore

Is the Minister aware how seriously our trade balance with the EC in manufactured goods has deteriorated? We are told that the overall total since we joined is minus £15 billion and that last year the minus total was over £6 billion. Is not the deficit this year running at an annual rate of getting on for £8 billion? To what does the Minister attribute this massive decline in Britain's manufacturing exports and balance of trade with the EC countries?

Mr. Lamont

It is inevitable, as we have growth in our exports both of oil and services, that one of two things will happen: either there will be increased growth in imports of manufactures or there will be an increase in the export of capital. That follows as a simple matter of arithmetic. As for the trend in visible trade—and we should not concentrate on one aspect of the matter—in the second quarter of this year we had a surplus of £650 million and in the third quarter we had a surplus of £400 million.