§ 14. Mr. Gouldasked the Chancellor of the Exchequer when he next expects to meet the Governor of the Bank of England to discuss medium-term financial strategy.
§ Mr. LawsonThe Governor and I regularly discuss financial developments in the context of the medium-term financial strategy.
§ Mr. GouldIs it not now clear that, according to that medium-term financial strategy, the only way to stop inflation rising, as it is now doing, is to maintain monetary and fiscal policy at its currently damaging and tight level, and that the price of that is ever-increasing unemployment? Is the Chancellor, for that reason, prepared to seek an escape from the dilemma created by his policies?
§ Mr. LawsonThere is every intention of maintaining strict monetary and financial discipline. That has secured a reduction in inflation to the lowest level since the 1960s and the longest period of sustained economic growth since the oil-price explosion of 1973. As for the correctness of those policies, I do not have time to give an economic lecture now, but the hon. Member may be interested to read the recent communiqué issued after the OECD ministerial meeting in Paris a few days ago, which gave unequivocal endorsement from the whole of the industrialised world to policies of the kind which we in this country and many other countries are pursuing. The Labour party alone is out of step.
§ Mr. FormanIn discussions with the Governor of the Bank of England, has my right hon. Friend considered-the possibility of keeping to a constant public debt-output ratio, so as to make more room for tax cuts in the near future?
§ Mr. LawsonThe debt-income ratio is one of the matters which we consider carefully. One cannot regard it as a unique indicator of the appropriate PSBR. It is one of the factors that we take into account.