HC Deb 03 July 1991 vol 194 cc311-2
13. Mr. Robert G. Hughes

To ask the Secretary of State for Trade and Industry if he will make a statement on Britain's recent record in attracting inward investment from the Federal Republic of Germany.

Mr. Leigh

According to figures just published by the German economics Ministry in Bonn, direct investment in the United Kingdom by German companies in 1990 amounted to £1.9 billion.

Mr. Hughes

Does my hon. Friend agree that that welcome figure is further proof of the enormous attractiveness of the United Kingdom's business climate, which has been achieved as a result of Government policies? Is that a one-off figure or does it represent a growing trend of inward investment from the Federal Republic? Does he agree that that figure and the performance of this part of the economy would be ruined by the destructive policies of the Labour party?

Mr. Leigh

Figures compiled since 1952 show that German companies have invested some £7.6 billion in this country. Remarkably, half that investment has been made in the past three years. In 1990, we received no less than 18.6 per cent. of all German foreign investment. If the doom and gloom merchants on the Opposition Benches are so right in saying that the economy is in a mess, why are we the No. 1 location for inward investment in the world and the favoured nation for German investors?

Mr. Batiste

Is it not clear that German investment in Britain merely reflects a worldwide pattern and that similar trends can be seen in America and Japan? is not the Government's record of creating stable industrial relations and low taxation over the past 11 years the essential ingredient in ensuring that that pattern continues?

Mr. Leigh

Yes, we are indeed the preferred location for inward investors from Japan and America, and that is a two-way process. Although about £7.8 billion has been invested in this country, we have invested £16.6 billion abroad, which shows the strength of our manufacturing base.

Mr. Skinner

Is there not another side to the issue? In the past three or four months West Germany has run into balance of payments difficulties because of its takeover of East Germany. Under the system of economic and monetary union of which we are now a part because of the Common Market, shall we not end up using British taxpayers' money to bail out the East German mess that the West Germans have taken over?

Mr. Leigh

I cannot speak for the hon. Gentleman's colleagues, but I have no intention of doing that. I am sorry to disappoint him, but investment from Germany is running at a very good level. That may be disappointing news for the hon. Gentleman, but it is the truth.

Mr. Favell

Could I take up the point made by the hon. Member for Bolsover (Mr. Skinner) whom I just failed to beat in the 1979 election? I remind my hon. Friend that in the 1975 manifesto issued by the pro-marketeers, those voting yes were assured that the threat of a movement of the Common Market towards an economic and monetary union had been removed and that that threat, according to the manifesto, would have restricted industrial growth and would have affected jobs. Is not it now clear that fixed exchange rates do exactly that, and it is as true now as it was in 1975?

Mr. Leigh

My hon. Friend knows my views on these matters. I have full confidence in the ability of the Chancellor and the Prime Minister to negotiate successfully.

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