15. Mr. Alan W. Williams
To ask the Secretary of State for Trade and Industry which Organisation for Economic Co-operation and Development countries have a trade surplus or a smaller trade deficit as a proportion of gross domestic product than the United Kingdom.
§ Mr. Redwood
All OECD countries except Portugal, Greece and Spain were in one or other category in 1988, the latest year for which complete figures are available.
Is it not an appalling comment on 10 years of Thatcherism that we are almost at the bottom of the world league and that we have the largest balance of payments deficit of any advanced country and the largest in our post-war history? Why is the country so economically weak and defenceless against that invasion of imports? How will the Government's policy of high interest rates and an overvalued pound help us out of that mess?
§ Mr. Redwood
I am not surprised that the hon. Gentleman should highlight that particular issue rather than the many good issues that should be highlighted about the state of the economy. Is the hon. Gentleman aware that the latest figures show that the unemployment rate in the Carmarthen travel-to-work area is down to 3.5 per cent? That is a fine tribute to the success of the Government's economic policies and I should have thought that he would want to say someting positive about that.
The hon. Gentleman must look more carefully at the state of the British economy to see the many good things that are going on. Why, for example, does he make no reference to the fact that we have the highest stock of overseas assets relative to our GNP of any country? Why does he not refer to the largest invisible surplus of any country? Why does he not refer to the fact that export volume is now up 11 per cent. on—[Interruption.]
§ Mr. John Townend
How long will it be before the import penetration in the automobile industry is reduced as a result of the massive investment, particularly from Nissan, Toyota and Honda? What effect will that have on the balance of trade?
§ Mr. Redwood
I was hoping to come to that in answering the hon. Member for Carmarthen (Mr. Williams) more fully. Export volume has grown by 11 per cent. in the past three months. As my hon. Friend the Member for Bridlington (Mr. Townend) rightly says, major investments have been announced by three large Japanese motor manufacturers, which will make a substantial increase to car manufacturing capacity in this country in the early and mid-1990s. As a large element in the deficit on manufactured goods lies in the vehicle sector, my hon. Friend is right to look forward to much better trading conditions in manufactured motor vehicles as a result of that positive inward investment.
317 It is a sign of the times that we are attracting a large amount of inward investment as people recognise the strengths of the British manufacturing base and the potential here for selling into 1992. A few years ago the Opposition were complaining when we were in the reverse position—when we had a surplus and were investing overseas. Now people are investing here to cure our balance of payments and trade deficit.
§ Mr. Gould
Given the appalling deterioration in our trade performance, which the Minister has been obliged to reveal in his answer—incidentally, that gives the lie to the blusterings of his hon. Friend the Minister about the competitiveness of British industry—what explanation does the Minister offer the House for what has happened, or in common with his right hon. Friend the Secretary of State, does he have no view to offer?
§ Mr. Redwood
I thought that Opposition Members were complaining that I had too many views as there is a lot to say about the strengths of the British manufacturing economy. I repeat that it is a sign of strength that people want to invest here. We have had a deficit in recent months because demand has outstripped supply in the short term. My right hon. Friend the Chancellor of the Exchequer has taken the prudent course of raising interest rates to slow the rate of growth in the economy, so that the supply side can catch up. I am sure that, in due course, that policy will be successful. I am also sure that inward investment will make an important contribution to changing the balance of payments position.