HC Deb 13 July 1995 vol 263 cc1075-6
3. Mrs. Helen Jackson

To ask the Chancellor of the Exchequer if he will make a statement on the economic impact of the latest balance of trade figures. [32549]

Mr. Waldegrave

Recent growth has been export led. In the year to the first quarter of 1995, exports were 9 per cent., while imports rose by only 0.5 per cent. That means that more than half of the United Kingdom's gross domestic product growth of nearly 4 per cent. is accounted for by net exports.

Mrs. Jackson

Does the Minister not see that our very weak trade position—a £1.4 billion deficit in April—reflects the Government's failure to invest in the economy? Does he not understand that the people in the special steel sector in south Yorkshire want to see a doubling of investment in jobs, skills and technology? How can the Minister justify possibly wasting £4 billion by reducing capital gains tax and inheritance tax rather than investing in our manufacturing base?

Mr. Waldegrave

The country's trade performance is extremely good. It is very much better than most forecasters predicted—including the forecasts that came from the Labour Front Bench in the days when Labour Front Benchers used to give forecasts. The hon. Lady referred to the steel industry. British Steel is one of the best steel companies in the world and it is exporting very strongly. That was not the case when it was nationalised. Any tax changes that may be introduced—when we can afford them—which will help capital markets and the economy will only strengthen that position.

Mr. Spring

Does my right hon. Friend recall that economic recoveries since the war have been blighted time and again by balance of payments crises? Does he agree that the present economic recovery is precisely the opposite, in as much as we are seeing an astonishingly good export performance?

Mr. Waldegrave

It is the first recovery since the war that has been led by exports. It used to be the holy grail that we all sought, and the country can be proud of achieving it. Above all, manufacturing industry, and the invisibles sector too, can be proud of it. If a few years back we had been told that the United Kingdom would, for example, export more televisions and microchips than either France or Germany, as we did last year, people would have thought that we were in cloud cuckoo land. Yet that is what we are now achieving.

Mr. Milburn

Can the Chief Secretary confirm that our weak balance of trade position is a reflection of the Government's failure to secure adequate investment in the economy? Which areas of investment does he propose to cut to finance the abolition of capital gains tax and inheritance tax?

Mr. Waldegrave

The premise of the hon. Gentleman's question is absurd. The trade position is extremely strong. I would like to know why he thinks that, under the Labour party's proposals, which are the same old proposals for directed investment, he would not produce more advanced gas-cooled reactors, more Concordes and more of those pretty catastrophic investment proposals which were produced in the past by that very system.