Trade Deficit (Hansard, 4 November 1993)

§ 7. Mr. Enright
To ask the Chancellor of the Exchequer what was the deficit on visible trade for the first seven months of (a) 1993 and (b) 1992.

§ The Chief Secretary io the Treasury (Mr. Michael Portillo)
The visible trade deficit was £8.75 billion in the first seven months of this year and £7 billion in the first seven months of last year.

§ Mr. Enright
Are not those figures deeply depressing, especially in view of the huge sums of taxpayers' money that were poured down the drain last year to devalue the pound and make us more competitive? Does not the Chief Secretary agree that it is crucial for us to sell more if we are to have a cat in hell's chance of a sustained non-inflationary recovery?

§ Mr. Portillo
The hon. Gentleman shows unusual enlightenment for an Opposition Member when he says that the crux of the matter is that we should sell more. The Government are concerned to make Britain more competitive. That is why we have kept Britain out of the social chapter. The hon. Gentleman's party is concerned to make Britain as uncompetitive as possible. I hope that, like me, he takes pleasure from the fact that during the past year our exports to areas outside the European Community rose by 11 per cent. and that Britain is more competitive. I hope that he will join me in saying that those are good achievements.

§ Mr. John Greenway
Is my right hon. Friend aware of yesterday's Touche Ross report on business prospects in Yorkshire and Humberside which points to clear signs of economic recovery in that region? As the economic recovery gathers pace, enabling us to make an impact on our trade balance, does he agree that the Government's policy must be to continue to bear down on inflation and encourage greater productivity and competitiveness in British industry?

§ Mr. Portillo
I am, indeed, pleased with the results of that survey. Recently, British management has got on top of its costs. Unit wage costs in this country have been 508 falling while they have continued to rise in Japan and Germany. Our productivity is at record levels. Manufacturing productivity growth in Britain has been the strongest of all the G7 countries during the past year. Those are great achievements, and they offer good prospects for British industry.

§ Dr. Berry
Is the Chief Secretary aware that we have never had such a large trade deficit at this point in the business cycle, and that, for the first time ever, we have a record trade deficit in the midst of a recession? Who does he believe to be responsible for that?

§ Mr. Portillo
I would prefer the deficit to be less than it is. However, I notice that foreign investors are showing great confidence in our country. They are investing more in Britain through inward investment than they are in any other European country. We are benefiting from one third of all the inward investment coming into the European Community, and foreign investors are also willing to buy our stocks and gilts. That shows that the trade deficit is fundable and I believe that the Government should continue to pursue policies that make Britain more competitive and also act on the fiscal deficit to bring it down.