HC Deb 10 May 1984 vol 59 cc1069-70
Mr. Campbell-Savours

asked the Chancellor of the Exchequer what use he makes of forecasts by other economic forecasters.

The Chief Secretary to the Treasury (Mr. Peter Rees)

The Treasury monitors a wide range of outside forecasts.

Mr. Campbell-Savours

Is it not true that of the 19 forecasters who have recently published their findings in the Financial Times, only four forecast a reduction in inflation in 1985, and that one of those was the Treasury itself and another its sycophantic supporters at Liverpool university? Why do the Government not take more notice of Professor Wynne Godley and the Cambridge school, because they, every year since 1978, have been absolutely right in their predictions about the level of unemployment and the reduction in manufacturing output? Why do Government supporters laugh when they know that that is the truth?

Mr. Rees

As the hon. GentLeman has singled out one forecaster, I am bound to say that Professor Wynne Godley's forecasts do not compare favourably with those of the Treasury and that in fact most outside forecasts since the autumn statement have been moving closer to that of the Treasury. The Treasury was a little over-pessimistic about the reduction of inflation last year. Other outside forecasters were a good deal more pessimistic. The Treasury has been proved more right than them.

Sir William Clark

While talking about forecasts, will my right hon. and learned Friend take this opportunity to refute the forecast that the Government have any intention of altering the tax arrangements for pensions during the passage of the Finance Bill through Standing Committee?

Mr. Rees

I am happy to give my hon. Friend that assurance.

Mr. Wainwright

Does the Treasury study these forecasts in respect of the effect on the British economy of the movement of the pound sterling on the various foreign exchanges and, if so, will the Treasury now make more plain the Government's exchange rate policy so that business confidence here is not shattered by sudden and erratic movements in exchange rates?

Mr. Rees

I and my right hon. Friends have made the Government's policy on exchange rates very clear.

Mr. Latham

Did not the economic forecast on the rate of inflation made at the last general election by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), leave a good deal to be desired?

Mr. Rees

That is certainly a forecast to which we did not pay a great deal of attention, but, in case the right hon. Gentleman would prefer the House to forget it, I remind the House that he forecast that if a Conservative Government were returned inflation would double by the end of 1983.

Mr. Gould

What changes in the Treasury forecast will have to be made as a result of the rise in interest rates?

Mr. Rees

That depends on how long that change persists. It may be a temporary fluctuation.

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