Balance of Payments (Hansard, 14 July 1988)

§ 2. Mr. Winnick
To ask the Chancellor of the Exchequer if he will make a statement on the current balance of payments position.

§ The Economic Secretary to the Treasury (Mr. Peter Lilley)
In the first five months of this year the current account deficit was estimated at £4.7 billion.

§ Mr. Winnick
Does the Minister admit that the figures for May were absolutely appalling—the worst monthly figures on record for any period? Is not the deficit for the first five months of this year three times the size of that for the whole of 1987, and are not all the indications that the position will worsen? Is this the foundation for what the Chancellor calls our economic recovery?

§ Mr. Lilley
The hon. Gentleman should recognise that there is all the difference in the world between a country that is running a deficit on its payments when it has a surplus on its public finances, and one that is running a deficit that reflects not the growth of investment domestically but a deficit that its Government are running, as the Labour Government that the hon. Gentleman supported produced for this country.

§ Mr. Tim Smith
Is it not inevitable, when the latest Department of Trade and Industry intention investment survey projects a 16 per cent. rise in manufacturing investment, that that should be reflected in our import figures? Do not those figures, and the excellent figures from the Department of Employment today, which show that manufacturing productivity is continuing to rise by 6 per cent., offer the best hope for continuing improvement in our competitiveness?

§ Mr. Lilley
My hon. Friend is right. The investment boom to which he refers also shows up in the import figures. In the past three months the growth in imports of investment goods was about 19 per cent. and that of consumption goods only about 10 per cent.

§ Mr. Gordon Brown
Is not the most worrying aspect of the high interest and high exchange rate policy now being pursued, not only that the Chancellor will be the first Chancellor in history to preside over a manufacturing trade deficit in excess of £10 billion, but that the trade deficit is deteriorating sharply in the new industries on which our industrial future depends—computers, information technology and electronics—where it is estimated to be £2 billion alone? Will the Treasury now honour the promise made by the Minister for Trade yesterday in the House to publish the revised forecasts for the balance of payments deficit and publish the forecasts for this year and for next year, or is it too ashamed of the real figures even to do that?

§ Mr. Lilley
My right hon. Friend has said that he will publish the revised forecasts in the normal way in the Autumn Statement as required under the Industry Act. The hon. Gentleman's presentation of the position of British manufacturing industry is grotesque, particularly in a week when we have heard that Britain has won the largest export order of manufactured goods ever. Clearly, that is not a sign that we are doing badly.
As for the overall picture of gloom and doom painted by the hon. Gentleman, it is clear that he does not really believe that there is a serious problem because the policies that he advocates are precisely those designed to create a real balance of payments problem.