HC Deb 02 February 1995 vol 253 cc1204-6
5. Mr. Thurnham

To ask the Chancellor of the Exchequer what representations he has received about future growth prospects for the United Kingdom economy.

Mr. Kenneth Clarke

I receive a large number of representations about prospects for the economy.

Mr. Thurnham

Does my right hon. and learned Friend welcome this week's survey by chambers of commerce throughout Europe, showing that Britain has the best job prospects of any country in Europe? Does not that prove the folly of the trade union-sponsored Opposition policies, which call for the implementation of the social charter in this country?

Mr. Clarke

I wholly agree. Last year, we achieved a big fall in unemployment, and the labour force survey showed a big increase in the number of jobs—particularly, I am glad to say, in full-time jobs—in the British economy. We have a far better record than has been achieved anywhere else in the EU. One reason for that is the firm monetary policy and strong fiscal policy of the Government, and a second reason is that we do not put unnecessary burdens and costs such as the social chapter on to employment, and we have no intention of doing so. That would damage our job-creating record.

Mr. Radice

Will the Chancellor tell the House why he has put up interest rates, as he has not said so?

Mr. Clarke

To deliver my stated objective of sustained growth with low inflation. We still have a buoyant economy, and surveys show that price expectations are still there. There has been a big increase in commodity prices, and producer prices are rising a little. I judged it timely to make a further increase today to ensure that growth is sustained without the recurrence of inflation.

I am not sure what the Labour party would do—it seems to say the same old stuff when it comments on the issue—but I strongly suspect that, at a crucial stage of the recovery, it would throw it all away by not taking the necessary steps to protect us against a recurrence of inflation.

Mr. Mark Robinson

My right hon. and learned Friend probably knows that I have not been the greatest fan of Treasury forecasting, but will he comment on the forecasts of the hon. Member for Dunfermline, East (Mr. Brown), who said in the debate on the autumn statement in 1992 that the balance of payments would worsen—[Interruption.]

Madam Speaker

Order. The hon. Gentleman must ask a question that addresses ministerial responsibilities.

Mr. Robinson

During consideration of my right hon. and learned Friend's ministerial responsibilities, will he examine the forecasting of the hon. Member for Dunfermline, East, who said in the 1992 autumn statement debate that the balance of payments would worsen and unemployment would rise and that the economy was generally on a downhill trend?

Mr. Clarke

In carrying out my ministerial responsibilities it is important that I maintain a healthy scepticism for forecasts of all types. I readily acknowledge that the hon. Member for Dunfermline, East (Mr. Brown) has a history of disastrous forecasts. I forecast that if he were in my position, he would have voted against all my tax increases and public spending controls, he would not have raised interest rates and this country would still be an industrial disaster. He still carps about the remarkable performance that we achieved in 1994 by ignoring his advice and forecasts.

Mr. Malcolm Bruce

Does the Chancellor accept that raising interest rates every six weeks does not constitute an economic strategy? Does he further accept that Britain needs investment? In the light of last week's CBI survey showing that investment is at an all-time low, does he accept that interest rates are likely further to depress investment in the economy, which will undermine our growth prospects?

Mr. Clarke

I realise that a Liberal Democrat Government would never put up interest rates, but would put them down every now and again. In the real world, however, investment depends on people's confidence that the Government will deliver sustained growth with low inflation. The fact that people are in no doubt about our determination to deliver low inflation will make them confident that they can get the return that they require on investment if they make it now.