§ 14. Mr. WareingTo ask the Chancellor of the Exchequer what is his latest estimate of the balance of payments deficit for 1988–89.
§ Mr. LawsonThe financial statement and budget report forecasts a current account deficit of £4 billion in 1988.
§ Mr. WareingDoes that answer not reveal to us that one of the real reasons for the deficit has been the fact that the Government have converted a manufacturing trade surplus into a chronic deficit? Will the Chancellor take the opportunity now to explain how high exchange rates will help our exporters to be competitive, and how, as he said in his interview in the Wall Street Journal, high interest rates, not only in this country but in others, will increase economic activity, encourage investors and, indeed, boost employment?
§ Mr. LawsonI am surprised that this figure really reveals anything, because it was published two months ago. As for the substantial point that the hon. Gentleman made, the comparison between this Government and the Labour Government is quite the reverse. During the whole period that this Government have been in office there has been cumulatively a substantial current account surplus, whereas during the Labour Government's period there was a current account deficit. Even more important is the real sign of competitiveness of manufacturing—yes, of manufacturing. During the period of the Labour Government Britain's share of world trade in manufactured goods was steadily declining. During the period that we have been in office it has stopped declining for the first time in decades, and has in fact risen slightly.