Balance of Payments (Hansard, 27 October 1988)

§ 14. Mr. McAvoy
To ask the Chancellor of the Exchequer what forecasts he has regarding long-term trends in the balance of payments.

§ Mr. Lawson
I will, as usual, be publishing a new forecast in the Autumn Statement next month.

§ Mr. McAvoy
In his Budget speech the Chancellor predicted a current account deficit of £4 billion. Will he be less prudent and more straightforward in answering the question? What is the deficit for the year likely to be?

§ Mr. Lawson
I am sorry to disappoint the hon. Member, but he will have to be patient for a little while. I shall publish a new forecast at the time of the Autumn Statement in the usual way next month.

§ Mr. Yeo
Does my right hon. Friend agree that there is an enormous difference between a country that is running a trade deficit and a deficit on its finances—Government finances—and a country that has a huge surplus on its finances and a trade deficit?

§ Mr. Lawson
My hon. Friend is quite right. I discussed this at some length in my speech at the annual meeting of the International Monetary Fund and World Bank in Berlin last month. There is indeed a fundamental difference between a Government who are running a surplus on their public accounts and one who are running a deficit on their accounts and therefore having to finance that by importing capital from overseas. That must be corrected by direct Government action to bring down their deficit. That is the position in the United States, as the United States authorities widely acknowledge. The United Kingdom is running a surplus on its public accounts; indeed, it is repaying its debt. Where a deficit arises simply and solely as a result of investment in the United Kingdom—private investment being in excess of private savings—it is a self-correcting process, even though it will take a little time for the correction to come through.