HC Deb 19 June 1986 vol 99 cc1192-3
16. Mr. Knox

asked the Chancellor of the Exchequer what are the criteria by which he judges signs of economic recovery.

Mr. Lawson

Since the trough of the recession in the first half of 1981 total output has risen by 13 per cent., investment by over 21 per cent. and manufacturing productivity by over 25 per cent.

Mr. Knox

When does my right hon. Friend think that his economic policies will be so successful that unemployment will start to fall?

Mr. Lawson

As my hon. Friend will be aware, the problem of unemployment is intimately connected with the excessive level of pay increases in relation to productivity. If unit labour costs continue to rise at their present rate, far faster than in the countries of our major overseas competitors, it makes it difficult to get unemployment down, despite the fact that we have succeeded in generating nearly 1 million new jobs since the last general election—a fact to which I would have hoped that my hon. Friend would pay due tribute.

Mr. Pike

Will the Chancellor accept that while he may claim that output and productivity in manufacturing industry has increased since the depth of the trough of the recession, it is still below the figure for 1979? Surely the Government will not be able to claim credit until we are making more manufactured goods than we were in 1979, and until we have considerably reduced the present unacceptable level of unemployment.

Mr. Lawson

The hon. Gentleman is completely wrong. Manufacturing productivity is substantially higher today than it was in 1979. What is more, the rise in manufacturing productivity under the Government has been substantially greater than it was under the Labour Government.