Trade Deficit (Hansard, 21 June 1989)

3. Mr. Alan W. Williams
To ask the Chancellor of the Duchy of Lancaster with which European Economic Community members Britain's trade is in deficit.

§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude)
In the 12 months to April the United Kingdom was in deficit on visible trade with Belgium and Luxembourg, Denmark, the Federal Republic of Germany, France, Italy, the Netherlands and Portugal.

Mr. Williams
The length of that list is impressive. The Minister scarcely missed out any EC country. How can the Government claim that we have the strongest economy in Europe when we have a trade deficit with virtually every other Community country?

§ Mr. Maude
The question of with which countries we have a deficit is wholly irrelevant. The fact is that three-quarters of the imports into this country are either semi-manufactured capital goods or intermediate goods. They reflect not just increased consumer demand, which is itself an example of the prosperity which pervades this country, but are a consequence of the high investment boom that has been going on. The hon. Gentleman should welcome those signs of strength.

§ Mr. Hill
Is it not nonsense to continue producing figures of deficits with Community countries when we are supposed to become one major trading bloc after 1992? What use are such figures to anybody in the Community, and should we not dispose of them in 1992?

§ Mr. Maude
I find no difficulty in the continued existence of the figures, but many people like figures for their own sake. When we place on businesses the requirement to fill in extremely detailed forms, we have to consider the use for which such information is gathered. As my hon. Friend will know, discussions are going on within Europe about the extent of detail that should be collected after 1992. We take the view that, while it may be right that there should be broad measures of trade between Community members, an excessive amount of detail is unnecessary.

§ Mrs. Mahon
Does the Minister realise that the large part of that deficit which is in textiles—23 per cent.—is worrying people who work in the industry, and that the Government are making things far worse by their policy of high interest rates? People in my constituency are not happy when the Minister trivialises a serious situation.

§ Mr. Maude
I have not trivialised it, but a percentage point on interest rates places only a third of the cost on industry of an extra percentage point on earnings. Those industries which are seeking and working extremely hard to increase their exports are not helped by the prospect of a dock strike, nor by the transport strikes today.

§ Sir Anthony Meyer
Will my hon. Friend confirm that there is no real danger of this country being forced to live on Brussels sprouts and that the advent of the single market in 1992 presents British industry and services with tremendous opportunities?

§ Mr. Maude
My hon. Friend is entirely right. That is why we have mounted a campaign to alert British businesses to the opportunities. However, we have also not sought to hide from British businesses the dangers that may be involved, and the dangers which flow from enhanced competition. The message has been that, for a business to succeed, it must be more competitive, which means containing its costs as best it can and developing its market, services and products to provide what the customer wants.

§ Mr. Henderson
How does the Minister explain what he would no doubt regard as the wholly irrelevant increase in our trade deficit with EC countries from £5.4 billion in 1979 to £18 billion in 1989, and what new steps does he intend to take to continue his economic miracle in Britain's trade with European countries?

§ Mr. Maude
The hon. Gentleman missed out of his potted economic history all the years between those two dates when Britain was in substantial surplus. I do not recall him or his colleagues popping up at every Question Time in those years saying what an economic success that was.

§ Mr. Marlow
There is some debate about joining the European monetary system, I believe. If we were in it, as I understand it, either sterling would be higher or interest rates would be lower, which would mean that either more money would be spent or foreign goods would be cheaper. What would that do to the trade deficit?

§ Mr. Maude
My hon. Friend raises a most interesting question which, as he will realise, falls outside my responsibilities. At this stage of the year it may be unwise for me to venture into that area.