§ 2. Sir Michael Shaw
To ask the Chancellor of the Exchequer what are the latest figures for the growth of business investment in the economy.
§ Sir Michael Shaw
Does not the continuing rapid rise in business investment underline a steady confidence in the actions and policies of my right hon. Friend? Does it not also point to a continuing confidence in the greater prospects for growth in business and employment in Britain in future?
§ Mr. Lawson
I am grateful to my hon. Friend for what he said. I am sure that he is absolutely right about the climate of long-term confidence that has been created in this country throughout business and industry, certainly given the continuance of the present Government, and that is of fundamental importance. Business investment has been one of the most encouraging aspects of the overall economic scene. Business investment now—that is, the figures for last year, the most recent ones we have—is now at the highest proportion of GDP that it has ever been since records began. Indeed, during the whole of the 1980s, total investment in this country has grown faster than in any other major European country.
§ Mr. David Howell
Is not one of the reasons for the current trade deficit the enormous growth in business investment in the economy? That means that our cities and our industries are being re-equipped and modernised at a fantastic rate. Given that for the past 20 years critics of British economic management have said that the one thing we really need is a rapid growth of investment, can my right hon. Friend begin to explain what on earth all the grumbling from the Opposition is about?
§ Mr. Lawson
My right hon. Friend asks a very good question, but I feel that it is not a question for me to answer. Perhaps it is a question for the right hon. and learned Member for Monklands, East (Mr. Smith). My right hon. Friend, who understands these matters very well, is absolutely right. It is striking, for example, that both last year and indeed the year before, the most rapid growth in all imports was in imports of capital goods. Capital goods are part of the investment boom and will provide increased capacity, increased growth and increased exports in the future.
Mr. John Smith
Can the right hon. Gentleman explain why the Government always seek to disguise the sad fact 346 that on the latest available figures, investment in manufacturing industry is lower than it was in 1979? Is it not the case that the failure to invest in that crucial, tradeable sector of our economy is the main reason why we now face a horrendous balance of payments deficit, the biggest since records began?
§ Mr. Lawson
No, that is not so. Indeed, manufacturing industry is in a far stronger position than it has been for a very long time. It is striking that manufacturing output today is well up on what it was when we first took office, whereas when the Labour Government were in office, manufacturing output fell; it did not rise at all. As for investments, the quality of investment is also important —[Interruption.] Yes, and the quality of investment has improved immeasurably, as is seen by the rate of return on capital and the fact that manufacturing profits are higher than they have been for a very long time and total business investment—and all forms of investment matter, not just manufacturing investment which is part of the story but not the whole story—total business investment is a higher proportion of total output than ever before since records began.