HC Deb 14 July 1988 vol 137 cc542-3
4. Miss Widdecombe

To ask the Chancellor of the Exchequer what has been the average annual increase in the productivity of the whole United Kingdom economy since 1980.

Mr. Major

Since 1980 output per head in the whole economy has grown at an average rate of 2¾ per cent. per year, about the same as Japan and faster than any other major industrialised country.

Miss Widdecombe

Will my right hon. Friend tell the House how far the increase in productivity compares with our performance in the 1960s and 1970s and with that of our competitors over those years?

Mr. Major

The improvement in productivity is greater now than at any stage in recent years, including the 1960s. The most effective recent comparative figures are that growth has been averaging 2¾ per cent. per annum since 1980, compared with a growth pattern between 1973 and 1980 of only 0.7 per cent.

Mr. Campbell-Savours

Why is the increase in productivity linked to such a massive balance of payments deficit? Is not the problem for the Chancellor of the Exchequer that he cannot leave his job next year? He is locked into his appointment because he is scared stiff of leaving a balance of payments deficit.

Mr. Major

I congratulate the hon. Gentleman on the ingenuity of his question. I share his wish that my right hon. Friend the Chancellor of the Exchequer will remain Chancellor for a considerable period. As my hon. Friend the Economic Secretary to the Treasury said, the deficit on the balance of payments and the balance of trade reflects partly a strong growth in domestic activity. It reflects also —this is material to manufacturing—the fact that a great deal of the import growth relates to capital, semi-capital and intermediate goods, which are being imported as part of the investment boom.

Sir John Stokes

Good as the figures are for manufacturing productivity, is my right hon. Friend not a little concerned about the large rise in wage rates? If they continue, they could threaten our economic growth.

Mr. Major

I share my hon. Friend's concern about the rise in wage rates, not least because we wish to see the dramatic reductions in unemployment continue. The rise in wage rates in part reflects overtime earnings and productivity bonuses, and that we welcome.