HC Deb 13 March 1986 vol 93 cc1074-5
13. Mr. Knox

asked the Chancellor of the Exchequer if he will make a statement on the level of total demand in the economy.

Mr. MacGregor

The 3½ per cent. growth of gross domestic product in 1985 is likely to be the highest in the European Community and probably higher than in the United States.

Mr. Knox

Does my right hon. Friend agree with the statement in the 1944 White Paper on employment that the country will avoid mass unemployment if the total demand for its goods and services is maintained at a high level?

Mr. MacGregor

I did not quite catch what my hon. Friend said, but I think that what is absolutely clear—[Interruption.] I am afraid that I missed a crucial word in my hon. Friend's question. However, it is absolutely clear that we have seen a higher growth in real demand and therefore in the level of proper demand in the economy, which I am sure he will agree is not money demand, as money demand has been brought down. It is the fall in inflation and the success of other policies that have enabled us to achieve that higher growth in demand.

Dr. McDonald

But is the Chief Secretary aware that the level of total demand is lower than it might otherwise be because the oil companies have failed to pass on to domestic and industrial consumers the 50 per cent. drop in crude oil prices? That failure means high and rising unemployment. What does the Chief Secretary intend to do to ensure that the oil companies pass on these benefits to the economy?

Mr. MacGregor

I recall that the hon. Lady wanted to have discussions with OPEC to ensure that oil prices did not come down. On balance, the drop in oil prices has been of benefit to the economy and has produced much greater prospects for industry, including exports, because of lower costs. I certainly hope that more of the lower prices will be passed on to assist industry to do even more.