§ Mr. Kenneth Clarke
In the three months ending September, the volume of retail sales was nearly 4 per cent. higher than a year earlier, and at record levels.
§ Mr. Dunn
Do not the encouraging sales figures underline the current EC forecast that Britain's economy will grow faster than any other EC country, both this year and next year, and that this, taken alongside other positive economic indicators, means that we are now facing a sustained economic recovery?
§ Mr. Clarke
Yes, we are the only major European country that seems likely to record growth this year. There has now been growth for six successive quarters. Most forecasters expect that it will strengthen somewhat next year. That steadily rising level of consumer demand is reasonably encouraging. I therefore reinforce my hon. Friend's message and point out to him that this morning's figures for new car registrations–15 per cent. up on 12 months ago—are a further encouraging feature. We have a long way to go, but the recovery is very much there and shows every prospect of strengthening ahead of our European partners next year.
§ Mr. Andrew Smith
Now that the Chancellor of the Exchequer is literally taxing consumers until the pips squeak, by imposing VAT on fresh orange juice, will not retail sales be depressed and jobs destroyed in that rapidly growing industry? Is it not the case that the Government extend VAT in a knee-jerk reaction to their financial incompetence? Will not the public fear that that orange juice VAT is just the first course in a whole menu of Government VAT on food? Should not the Chancellor tell us now that there will be no imposition of VAT on any further food products?
§ Mr. Clarke
The hon. Gentleman knows that the measure that we passed last night, in the middle of a number of another type of votes that attracted more attention at the time, was a minor technical change. We have always taxed manufactured fruit juice in this country. There was a dispute and there have been tribunal cases about whether orange juice produced in factories was a manufactured fruit juice. When the matter was scrutinised 510 in Committee it took about half an hour and the vote last night was eminently sensible and fair to apple juice producers. [Interruption.]
The Labour party has abandoned its previous economic policies and its previous proposals because they proved to be unpopular, but it cannot substitute for that all the nonsense about paying for everything out of non-existent loopholes and scratching around trying to build cases against technical amendments taken late at night.
§ Sir Peter Tapsell
While I fully support my right hon. and learned Friend's declared determination to reduce the fiscal deficit, I urge him to compensate for the deflationary effects that that is likely to have on retail sales by reducing our interest rates to nearer the much lower levels of Japan and the United States. There, real interest rates are less than half those in this country, even allowing for the somewhat pessimistic recent forecasts of the Bank of England about future inflationary trends here.
§ Mr. Clarke
We shall continue to determine monetary policy following the guidelines that we set out as a necessary discipline upon ourselves after our withdrawal from the exchange rate mechanism. There has been a steady reduction in interest rates in this country for a considerable time—about two years. That has helped to boost the recovery here and we shall have to ensure that the right conditions are retained here. We continue to have some of the lowest interest rates in the European Community and we are sustaining the strongest level of growth of any major economy within the Community.