HC Deb 15 February 1989 vol 147 cc306-7
10. Mr. Dunnachie

To ask the Chancellor of the Duchy of Lancaster which Organisation for Economic Co-operation and Development countries are running a larger trade deficit as a percentage of gross domestic product than the United Kingdom.

The Minister for Trade (Mr. Alan Clark)

In 1987 Greece, Portugal, Turkey, Spain, Austria and the United States had larger visible trade deficits than the United Kingdom in relation to their gross domestic product.

The OECD figures for 1988 are not yet complete, but we already know that at least four countries will have deficits larger than the United Kingdom when measured on that basis.

Mr. Dunnachie

It seems strange that the noble Lord Young and the Department of Trade and Industry seem to have ignored or not noticed that our trade gap for 1988 is some £13 billion. That gap is so great that it will require a reduction in demand of about £40 billion, or about £30 per week per household to bridge the gap. Does it not follow that safe supply measures should be taken to increase the ability of British industry to meet the demands of the British economy?

Mr. Clark

I wish that the hon. Gentleman had read more copiously from his notes as I did not entirely follow his question. There is no dispute over the component elements of the deficit. Presumably the hon. Gentleman would not wish to restrict the import of semi-manufactures which feed British industry. The import of consumer goods is a function of consumer spending and it is well know that Opposition Members wish to restrict that by credit controls, wage controls and, for all I know, by exchange controls.

Mr. Charles Wardle

Does not one important key for reducing the trade deficit and making British goods more competitive rest in the hands of employers and employees throughout the country in this year's wage round and all future pay settlements?

Mr. Clark

It is a factor certainly, but I am never comfortable arguing that work people should be paid less in the interests of some wider objective. If their productivity and the quality of the goods that they produce measure up, they have every right to negotiate separately and independently with their employers on the appropriate rate.

Ms. Armstrong

Is it not a fact that one of the major problems that has led to our incredible balance of payments deficit is that we have lost the capacity to manufacture in many areas, and that areas such as mine, which used to be the powerhouse of the country where we could manufacture and produce products that were sold all over the world, have now lost the capacity to do that? The Government ought to be involved in increasing investment in manufacturing particularly in areas such as the north where we do it well.

Mr. Clark

Government involvement in manufacturing is the last thing that the manufacturing industry wants. In fact, there is absolutely no reason why something should not be made from scratch, providing that it is competitive and is of the required quality. One has only to look at the production of Nissan cars in a green field site to see that if the product is competitive and meets a demand, it will immediately take a piece of the market.

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