HC Deb 14 June 1984 vol 61 cc1057-8
7. Mr. Skeet

asked the Chancellor of the Exchequer how the United Kingdom's rate of economic growth compares with those of other European Economic Community countries.

Mr. Lawson

The United Kingdom rate of growth last year was the fastest in the European Community. I expect us to be at or near the top of the league this year, too.

Mr. Skeet

I congratulate my right hon. Friend on that fine performance, which is due to the monetary and fiscal policies that have been pursued. Is that result due in part to our North sea oil industry and the City of London? However, there is anxiety about manufacturing industry generally. Will that industry be able to maintain its performance in the next 10 years?

Mr. Lawson

I am grateful to my hon. Friend for his well-deserved tribute to British industry and commerce, manufacturing, investment, the City of London and the North sea oil industry, on which he is such an expert. I have no reason to doubt the strength and robustness of the recovery, not least in British manufacturing industry. My hon. Friend may be interested to know that, in the six months to March 1984, manufacturing industry's investment increased by 9.5 per cent., and the most recent survey of the Department of Trade and Industry on the investment intentions of manufacturing industry shows an increase of 12 per cent. this year.

Mr. Gould

Has the Chancellor seen the excellent report from the Select Committee on Trade and Industry on the deficit in our trade in manufactured goods with the EEC? Is he aware that this year that deficit is already running at over £9 billion? Is that not a definitive judgment on the Government's economic policy? How does the right hon. Gentleman meet the charge of complacency that has been levelled against the Government by that Committee?

Mr. Lawson

It is absurd for the hon. Gentleman to put such a question. He has a nodding acquaintance with economic matters, unlike many of his right hon. and hon. Friends, and he ought to know better. He is aware that it is absurd to pick one component from the balance of payments. The current account of the balance of payments figures for last year has now been revised. It shows a surplus of nearly £3 billion. We are in surplus this year and expect to remain so.

Mr. David Howell

If the Americans cut their deficit next year, as everyone has been urging them to, and if that leads to some downturn of the American economy in 1985–86 and the onset of a new recession—albeit a mild one, I hope—has my right hon. Friend any plans to ease some of the monetary constraints here to compensate for the downturn in the United States and Western economies generally that may result?

Mr. Lawson

It is a little difficult to speculate as to what is likely to happen in 1985, let alone beyond. It is perfectly true that the Americans intend to reduce their budget deficit in 1985 and further to reduce it in 1986 and 1987. That is all to the good. However, it does not follow that there will be any downturn in the American economy. I shall draw my right hon. Friend's attention to the analogy: our recovery began in 1981 in the wake of a Budget which reduced our Budget deficit substantially to one of the lowest in the industrialised world. We have kept it low and the recovery has continued.

Mr. Yeo

Does my right hon. Friend agree that the essential preconditions of sustaining our present economic recovery are the achievement of stable prices and continued control of public expenditure and the money supply, and that the reduction in unemployment that vie all desire so much can be achieved only by those policies?

Mr. Lawson

My hon. Friend is correct. Those are preconditions for continued sustained recovery and the creation of new jobs. There are other ways in which we seek to create new jobs or promote conditions in which they will be created—for example, by making the economy work more efficiently and effectively through fewer impediments and restrictions in markets, deregulation, more competition, more privatisation, and by changing the tax system, as I did in the Budget, in a way that is more favourable to employment.

Dr. McDonald

How can the Chancellor expect us to believe what he says about anticipated growth rates this year when total production stagnated in the first quarter of this year, is likely to fall in the second, and is, incidentally, below 1979 levels?

Mr. Lawson

The gross domestic product of the country's total output at present is at an all-time high and markedly above 1979 levels.