Gross National Product: Exports (Hansard, 10 October 1990)

§ The Minister of State, Department of Trade and Industry (Lord Hesketh)
My Lords, in 1988 exports of goods and services accounted for 24 per cent. of the value of gross national product.

§ Lord Hooson
My Lords, does that not contrast with the position in West Germany where more than two-thirds of the gross national product is accounted for by exports? Should we not be looking more at the way in which Germany achieved that position, particularly now that we are within the ERM? Is it not a fact that British industrial production for exports has decreased as a proportion of our gross national product during the past 20 years?

§ Lord Hesketh
My Lords, if one looks at the figures in constant 1985 prices, in 1980 the figure was 27.5 per cent. and in 1989 it was 28.3 per cent. However, it is also worth remembering that during the previous three-month period exports rose year on year by some 10 per cent. against imports, which rose by 0.5 per cent.

§ Lord Taylor of Gryfe
My Lords, in view of the agreement that exports are essential to this country can the Minister give the House a guarantee that any new arrangements which are proposed by the Export Credit Guarantee Department will not put British exporters at a disadvantage against their competitors?

§ Lord Hesketh
My Lords, that is wide of the Question on the Order Paper. I should be more than happy to answer if the noble Lord, Lord Taylor, would care to table a Question.

§ The Earl of Lauderdale
My Lords, does my noble friend agree, with regard to a comparison with Germany, that the Germans work jolly hard?

§ Lord Hesketh
My Lords, I like to think that not only do the Germans work very hard but that your Lordships' House does so too.

Lord Bruce of Donington
My Lords, is the Minister aware that the figures he gave this afternoon are at variance with those published in the official statistics in the government Blue Book for 1990, particularly those at page 13? There it is clearly stated that the percentage of exports to the gross national product referred to by the noble Lord, Lord Hooson, amounted in 1988 to 22.9 per cent. and in 1989 to 23.8 per cent. That is as distinct from the figure in 1979 which showed a percentage of exports to gross national product of 27.5 per cent. Will the Minister take steps to elucidate the difference between those two official figures, which his department can verify by inspecting the document to which I referred?

§ Lord Hesketh
My Lords, I assure the noble Lord, Lord Bruce, that the figures I originally quoted are entirely accurate. As I am sure many noble Lords are aware, the difficulty is that there are many different columns and we could enter into a lengthy but perhaps not entirely constructive debate. I return to the figures I quoted, which I believe to be entirely accurate. They related to the export of goods and services as a percentage of GNP but the noble Lord disagreed with what I said. The figure I have for 1980 is 27.5 per cent. and that for 1989 is 28.3 per cent.

§ Lord Stoddart of Swindon
My Lords, is not one of the reasons for our bad performance in exports the fact that the pound has been overvalued against the deutschmark and other currencies for a long period of time? Is it not a fact that entry into the ERM will 277 institutionalise and set virtually in stone that imbalance and make it more difficult in the future for our exporters in world markets?

§ Lord Hesketh
My Lords, stone does not have the property of being able to be flexible by 6 per cent. up or down.

§ Lord Holme of Cheltenham
My Lords, is the Minister aware that many British exporters are anxious and seriously believe that the level at which we have entered the ERM—that is, 2.95 against the deutschmark as the mid point—is probably too high and will pose problems for British exporters in the longer term? Is the Minister also aware that exporters believe that even the movement up and down permitted within the ERM will not promote their best interests in exporting? Is not the rate of 2.95 more a product of the high interest rates in Britain caused by the necessity of remedying the Government's economic policies than of the appropriate level of sterling in world markets and, therefore, the best long-term interests of British exporters?

§ Lord Hesketh
My Lords, as I said in my Statement on Monday, the ERM will impose a discipline on the British manufacturing industry whereby it cannot look to price inflation to save the day. I am interested to note that within four days of our joining the ERM the Benches opposite are deciding whether they are happy with the rate at which we entered.

§ Lord Harmar-Nicholls
My Lords, whatever message my noble friend's answer may have given when he spoke in percentage terms, is it not a fact that since last year the volume of exports has continued to increase, and is not that the important issue that we should keep in mind?

§ Lord Hesketh
My Lords, of course my noble friend is entirely correct because exports are not able to indulge in the same inflationary activities as occur in the domestic market. If domestic inflation is stripped out, the story as regards our exports over the 1980s is one of stability.

The Earl of Halsbury
My Lords, is not gross national product defined as domestic production plus imports, minus exports? Unless we have all three figures in front of us, the questions are liable to fall into confusion.

§ Lord Hesketh
My Lords, I am very grateful for the intervention by the noble Earl because I believe that we are falling into some confusion with the comparative figures of only one of those three components which he mentioned.

Lord Bruce of Donington
My Lords, will the noble Lord please review in Hansard the replies which he has given and the figures which I gave him? Will he undertake to explain the discrepancy between the figures which he has given and the official figures which are already enshrined in the book to which I referred?

§ Lord Hesketh
My Lords, I am referring to figures which are drawn from official sources. If I am wrong 278 I shall be the first to pay tribute to the noble Lord, Lord Bruce of Donington. However, I must say that I believe that he has got the wrong end of the stick.

§ Lord Ezra
My Lords, in view of the obvious need to continue to expand our exports, would the noble Lord indicate whether the Government have in mind to review the services to exporters rendered by the British Overseas Trade Board with a view to expanding and strengthening them?

§ Lord Hesketh
My Lords, I believe that the noble Lord, Lord Ezra, makes a good point. However, I am not sure that that is entirely within the confines of this Question. If he wishes to table a Question, I shall be more than happy to answer it.

§ Baroness Seear
My Lords, in view of the well known inaccuracy of the official statistics, is not the whole of this argument somewhat unreal?

§ Lord Hesketh
My Lords, I like to think that, on the basis of Monday with the result of the Pickford Committee and further commitments made by the Chancellor, if the noble Baroness's suggestions are correct, rectification is already under way.