HC Deb 13 July 1988 vol 137 cc345-7
5. Mr. Canavan

To ask the Chancellor of the Duchy of Lancaster what is the latest balance of trade in manufactured goods.

9. Mr. Allen

To ask the Chancellor of the Duchy of Lancaster what is the cumulative trade deficit in manufactures so far in 1988.

The Minister for Trade (Mr. Alan Clark)

In the five months ended May, there was an estimated deficit on trade in manufactures of £5.2 billion.

Mr. Canavan

What excuse does the Minister have this month for the ever-worsening deficit in manufactures and the worst-ever deficit in overall trade? As the official Budget forecast of a £4 billion overall trade deficit by the end of this year has already been exceeded, is it not about time the Government gave us a revised estimate, or are they too ashamed to admit that their's is the most deplorable record of any Government in history?

Mr. Clark

My right hon. Friend the Chancellor of the Exchequer has stated that he will issue a revised estimate. Over 70 per cent. of the deficit is accounted for by increased consumer spending. That is a function of high earnings and a raised standard of living. We know that the Labour party objects to that and that it lost the last three general elections.

Mr. Allen

The Minister will be aware that his manufacturing industry policies have decimated manufacturing in Nottingham, North. There have been job losses at Plessey, Boots, Raleigh, Players, and the closure of Thorn EMI and three neighbouring pits. Are they what the Minister would call the problems of success? When will unemployment in my constituency of Nottingham, North be reduced to 1979 levels?

Mr. Clark

The decimation of manufacturing industry is a pure myth. Since 1981 our share of world trade has remained absolutely constant, and world trade continues to expand.

Mr. Roger King

Does my hon. Friend agree that British manufacturing has never been in a finer state? The magnificent order that British Aerospace won with Saudi Arabia, for a huge sum in the region of £15 billion, is further evidence that we are producing the finest products at the right price to do the job that people want.

Mr. Clark

My hon. Friend is entirely right. Further testimony to the vigour of British manufacturing industry is offered by the readiness of foreign private sector capital to come here and start manufacturing operations. That point was made by my right hon. Friend the Prime Minister to the Leader of the Opposition only last week, just before he ran away to Africa for a fortnight's holiday.

Mr. Beaumont-Dark

Does my hon. Friend accept that it is undoubtedly true that British manufacturing industry is now doing better at home than it has done for many a long year? However, companies such as British Aerospace, Jaguar, Plessey and many others are finding their margins being squeezed because of the high rate of the pound. We must not go back to the days when we thought that a high pound was good for the country. We need a competitive pound, so that industry can export and compete with foreign manufacturers.

Mr. Clark

I do not know what my hon. Friend means by "competitive pound". The only solution that the Labour party has ever offered to that synthetic problem is continuously to depreciate the exchange rate. The most successful exporting countries are those that have the strongest exchange rates.

Mr. Austin Mitchell

What will the £5.2 billion deficit be at an annualised rate? What will be the consequences for British manufacturing industry of the massive deflation that is now beginning?

Mr. Clark

I have already told the House that my right hon. Friend the Chancellor of the Exchequer will issue a new forecast. Why does the hon. Gentleman not have the honesty to recommend to the House the Socialist solution to the gap, which is the return of exchange controls and import controls, with all that they mean for confidence in investment and consumer choice?