§ 1. Mr. Pikeasked the Chancellor of the Exchequer what effects the recent fall in oil prices will have on the Chancellor's forecasts for the balance of payments in 1986 and 1987.
§ The Chief Secretary to the Treasury (Mr. John MacGregor)My right hon. Friend the Chancellor has asked me to apologise for his absence today as he is attending the annual OECD meeting in Paris.
The forecast in the financial statement and Budget report, which took into account the recent fall in oil prices, showed a current account surplus both this year and in the first half of 1987.
§ Mr. PikeDoes the Chief Secretary agree that not only will the fall in revenue from oil prices seriously affect our balance of payments, but so will the fall in oil products? Will that not mean a rapidly growing crisis in our balance of payments? What do the Government intend to do to rectify the present imbalance in our trade in manufactured goods, with which the Budget failed to deal adequately?
§ Mr. MacGregorI do not think that there will be those consequences. In no previous five-year period in recent history has manufacturing output been so successful in holding its market share and keeping pace with world output. The hon. Gentleman will know from the Budget that the buoyancy in the non-oil part of our economy is showing through substantially.
§ Mr. Phillip OppenheimIs not the fact that the pound has remained reasonably strong during the past couple of months a tribute to the sound management of the economy by this Government?
§ Mr. MacGregorMy hon. Friend's remarks are absolutely right.
§ Mr. Robert SheldonIs it not clear that not only has the drop in oil prices affected the amount that we are likely to obtain in foreign exchange, but that our competitive position vis-a-vis France, Germany and especially Japan has worsened considerably because those countries have been paying substantial sums for their oil? In view of that, will the right hon. Gentleman consider at least starting talks with OPEC to ensure that we obtain a reasonable price for the very important asset that we own?
§ Mr. MacGregorI hope that the right hon. Gentleman is not suggesting that we should have talks with OPEC about keeping up oil prices. He will surely agree that the United Kingdom economy is benefiting considerably from the fall in oil prices, although perhaps not as much as other economies. He must be aware of the beneficial position of the exchange rate in relation to the countries to which he referred.
§ Mr. FavellIs not the United Kingdom doing the whole world a great favour by refusing to talk to OPEC or to put up oil prices to an unnecessary level?
§ Mr. MacGregorI have not the slightest doubt that the fall in oil prices is helping the growth of the world economy, from which we must benefit.