HC Deb 27 October 1994 vol 248 cc995-6
6. Mr. Thurnham

To ask the Chancellor of the Exchequer what is his latest estimate of the growth of the economy.

Mr. Kenneth Clarke

Figures released last week show that GDP grew by more than 3.5 per cent. in the year to the third quarter of 1994. Let me add that the country's economic prospects are so good that my Treasury team is prepared to answer supplementary questions on any aspect of the economy, in response to any question.

Mr. Thurnham

Does my right hon. and learned Friend agree that rising output, low inflation and falling unemployment make our economy the envy of our competitors? Is it not time that the Opposition realised that the one thing that would stop our economy would be the adoption of their policies, with minimum wages, social charters and, inevitably, rising taxes?

Mr. Clarke

I quite agree. I believe that my hon. Friend has drawn his conclusions in part from the forecast of the International Monetary Fund, which expects ours to be the fastest growing economy in Europe, both this year and next. As my hon. Friend implied, last year we had to make some difficult fiscal decisions, and the Opposition voted against all the public spending savings measures that we had to take through the House. Their approach to the economy would pull down our growth rate and prospects and damage what we are currently poised to achieve.

Mr. Shore

In the interests of continuing the growth of the economy, and taking account of the enormous help that the Chancellor gave us through the 17 per cent. devaluation that took place when we left the exchange rate mechanism, will the right hon. and learned Gentleman now assure us that, in the latest movement of interest rates and in any future movement, he is not simply trying to shadow the deutschmark as his last predecessor but one did so disastrously two or three years ago?

Mr. Clarke

I am tempted to take issue with the right hon. Gentleman's premise. The recovery had started before we left the ERM; interest rates started to fall before we left the ERM; and inflation started to come down before we left the ERM. The fact that good Government policies since we left the ERM have allowed us to retain the competitive advantage of that devaluation without subsequent inflation is to the Government's credit.

I can assure the right hon. Gentleman that I am not shadowing the deutschmark. I accept that exchange rates either float or are fixed; we are currently floating, and we are maintaining stability through the responsibility of our policies.

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