HL Deb 12 July 1984 vol 454 cc1038-41

3.9 p.m.

Lord Ezra

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what are the latest figures and trends in the balance of our visible trade with the Federal Republic of Germany.

Lord Lucas of Chilworth

My Lords, in the first five months of this year there was a crude deficit of £1.6 billion on our trade with the Federal Republic of Germany. Exports and imports have been increasing at similar rates over the past 18 months.

Lord Ezra

My Lords, in thanking the noble Lord the Minister for that information, may I ask him whether or not he is aware that during the course of 1983 our adverse balance on manufactured goods with Germany alone was no less than £5 billion; and that adverse trend is now looking worse so far this year? In view of the fact that we are also encountering similar difficulties with other countries—although not on such a large scale—would the noble Lord the Minister not agree that it is now time to take very urgent action to correct this trend, and would he kindly advise the House what the Government have in mind?

Lord Lucas of Chilworth

My Lords, if I might perhaps correct the noble Lord, Lord Ezra, my understanding is that the crude balance of trade deficit for 1983 with the Federal Republic of Germany was in fact £3.6 million and not £5 million.

Noble Lords


Lord Lucas of Chilworth

Billion. Noble Lords will wish to know that the Federal Republic of Germany take 10 per cent. of United Kingdom exports, and that is some seven and a half times larger by value than the 1973 level. Compared to world trade, which was only five times larger, it shows a healthy improvement.

As to what the Government are doing, the noble Lord, Lord Ezra, will know that the British Overseas Trade Board through a variety of their agencies—the European Trade Committee, of which he was such a distinguished chairman at one time, the Export to Europe branch, regional offices and commercial posts—play their part. The total Government support for exports and export promotions is estimated to be £113.5 million in this current year.

Lord Bruce of Donington

My Lords, is the noble Lord the Minister aware that the initial figures which he gave related quite correctly to the visible trade figures, which of course include oil, whereas the supplementary question addressed to the noble Lord the Minister by the noble Lord, Lord Ezra, related to manufactures? Could the noble Lord supplement his original figure by giving the House the deficit in respect of trade in manufactures? Is the noble Lord aware that the position which it discloses—let alone that disclosed by the visible trade figures—is, of course, quite disastrous whatever comparisons the noble Lord may make? Is the noble Lord aware that there is a view already widespread in this country that it is for the Government to take active steps in correction of this matter?

Lord Lucas of Chilworth

My Lords, the figure for which the noble Lord, Lord Bruce of Donington, asks is in fact minus £4.9 billion in manufactured goods. I have answered, I think, what the Government have done, and I reiterate answers which I have given on other occasions stating that it is largely for British industry itself to accept those policies which would help it to become more competitive and more efficient in providing goods at the right kind of price and at the right kind of timing. The Federal Republic of Germany and indeed the world are desirous of buying from us. As I have said, the Government have spent £115 million in support of that endeavour.

Lord Hawke

My Lords, is the noble Lord the Minister aware that in the early days of this century when I was a small boy similar complaints were made about German inroads into our trade, and the policy of the Conservative Party in those days was to protect British industry?

Lord Lucas of Chilworth

My Lords, I am quite sure the Government are well aware of what might have happened in the early part of the century; I must confess to my noble friend, that I am not. I can say that it is the policy of the Government to avoid protectionist policies; we believe in free enterprise and free and fair competition across the world.

Lord Roberthall

My Lords, would the noble Lord the Minister not agree that the general trade pattern is one of multilateralism, and that you cannot deduce very much from attempting to look at bilateral balances?

Lord Lucas of Chilworth

My Lords, indeed I agree with the noble Lord, but since the original Question was directed only to the Federal Republic of Germany, I felt obliged to answer it in those terms. The noble Lord is, of course, quite right.

Lord Beswick

My Lords, when the noble Lord talks about free and fair competition, has he in mind that British manufacturers would now have to borrow at something like 14 or 15 per cent.?

Lord Lucas of Chilworth

My Lords, I am aware of that. The noble Lord, Lord Beswick, will appreciate that the rise in interest rates to which I think he refers reflects market pressures to which clearers have been obliged to respond. Base rates were last at 12 per cent. in July 1982, and the House will no doubt recall that by November of that year they were down again to 9 per cent.

Lord Stoddart of Swindon

But, my Lords, are the Government not being utterly complacent about this matter, because in addition to the deficit on manufactured goods which we have with the Federal Republic of Germany there is a further deficit with the rest of the EEC which last year produced an overall adverse balance of £8,000 million—equivalent to 800,000 jobs? If the Government allow this adverse balance to increase and continue, then they will never get hold of the unemployment problem and reduce unemployment in this country. Will the Government be less complacent and do something?

Lord Lucas of Chilworth

My Lords, I totally refute the allegation that the Government are complacent. Since there have been surpluses in our balance of trade right across the world over the last four years. I find the implication behind the noble Lord's question not proved.

Lord Thorneycroft

My Lords, will the noble Lord the Minister encourage Lord Roberthall to continue educating the noble Lord, Lord Ezra, in the principles of multinational trade?

Lord Lucas of Chilworth

My Lords. I am sure that the noble Lord, Lord Ezra, needs no education; his experience is too deep and too long for that.

Lord Ezra

My Lords, in view of the intervention of the noble Lord, Lord Thorneycroft, with whom I had much contact in the British Overseas Trade Board, may I now say that of course I see the importance of multilateralism. My question was related to the Federal Republic of Germany as one of our major competitors. What I should like to ask the noble Lord the Minister is this: if the Federal Republic of Germany have built up such a very positive balance in their manufactures with us both in motor-cars and in other products, can we not at least study the way in which they have achieved this, both by the policies of government and by the reactions of industry, and see if we can follow in that direction?

Lord Lucas of Chilworth

My Lords, I thought when the noble Lord, Lord Ezra, put his first supplementary question that he and my noble friend were going to engage in a question and answer session. Since I understand that his last question was addressed to me, I think I should say that the European Trade Committee have set up two special working parties to study particular aspects of our trade relationship in Germany, and I hope that that will give the noble Lord, Lord Ezra, some encouragement in the underlying question.

Lord Nugent of Guildford

My Lords, is my noble friend aware that the Government's policies in progressively reducing inflation, and so increasing the competitive edge to industry in this country, have given a massive improvement in our capacity to win markets back—an improvement which no other government have been able to achieve for very many years? Is my noble friend aware that industrial disputes, which increase costs, are the high road to losing that competitive edge? Is he aware that Germany has just suffered from a very serious disruption throughout her steel and motor-car industries which will undoubtedly affect the balance of trade in the current year somewhat in our favour?

Lord Lucas of Chilworth

My Lords, I am most grateful to my noble friend Lord Nugent of Guildford because he does, of course, put his finger on the point. I had avoided reciting again the policies of the Government, all of which have made their proper contribution to our economic improvement across the world. Of course, I agree with my noble friend that the cessation of production of whatever it may be—manufactured goods or, indeed, commodities—for whatever reason, does have a very adverse effect upon our trade with other countries.