HL Deb 27 October 1992 vol 539 cc1014-6

3.9 p.m.

Lord Ezra asked Her Majesty's Government:

What is their estimate of GDP for 1992 compared with 1990 and 1991.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, my right honourable friend the Chancellor of the Exchequer will publish a new forecast in the Autumn Statement.

Lord Ezra

My Lords, while recognising that the noble Earl cannot anticipate the Autumn Statement, nonetheless is he aware that reputable independent forecasts have suggested that compared with the 2.4 per cent. fall in GDP last year there is likely to be a further fall of 1 per cent. this year and very little prospect of noticeable improvement next year? Is he also aware that the CBI has recently published its quarterly trend statement which suggests an increase in pessimism among its respondents for future business prospects? The Government have recently announced that they will take steps to seek to achieve a recovery of the economy. Will the noble Earl tell us in broad terms what those steps may be?

The Earl of Caithness

My Lords, the noble Lord mentioned reputable forecasters. He will be aware that the average forecast of the independent reputable forecasters happens to be the same as the Treasury's at Budget time. With regard to the recent CBI survey, I am sure that the noble Lord will agree that it is not surprising that confidence has fallen, given the recent turbulence in financial markets and general uncertainty about the economy. The Government are taking active measures in that field and we look forward to expanding on those when answering his noble friend's Question next week.

Lord Marlesford

My Lords, does my noble friend agree that there is an urgency to revive the economy in a non-inflationary and non-consumer led way? I am thinking of the reintroduction for a period of two or three years of the 100 per cent. capital allowance for plant and machinery. Does my noble friend agree that although such measures normally require to be introduced in the Budget, the situation is too serious to be constrained by the conventional Budget timetable in each year?

The Earl of Caithness

My Lords, I wholeheartedly agree that any recovery should be non-inflationary, and that has been the basis of the Government's policy. I take note of my noble friend's other points and will bring them to the attention of my right honourable friend. It is worth stressing that a successful conclusion to the GATT round would be helpful.

Lord Stoddart of Swindon

My Lords, as it is clear that our membership of the ERM has caused a reduction of GDP, can we have an assurance that there will be no early return to the ERM and perhaps no return at all?

The Earl of Caithness

My Lords, that is an interesting question but slightly wide of that on the Order Paper.

Lord Boyd-Carpenter

My Lords, will my noble friend confirm that the obstacle to a happy conclusion of the GATT round is the attitude of the French? Will Her Majesty's Government take the strongest action against them?

The Earl of Caithness

My Lords, during his presidency of the EC my right honourable friend the Prime Minister has taken extensive action to bring the GATT round to a successful conclusion. We shall continue to do so and shall strive with might and main.

Lord Whaddon

My Lords, does the Minister appreciate that the closure of coal mines will deal a grievous blow to GDP as well as to the balance of payments?

The Earl of Caithness

My Lords, the subject of the closure of coal mines was recently well ventilated in your Lordships' House.

Lord Peston

My Lords, I do not wish to pursue the French attitude, although recent history has shown that one of the more effective ways of returning to full employment is to declare war. I hope that is not what the Minister has in mind! Obviously we shall wait to hear the Autumn Statement but the Treasury is always coy about saying what it believes. My question relates not to politics but to the general attitude of the Treasury. In order to enable businessmen in particular to plan properly for the future, is it not time that the Treasury produced monthly a view of what it believes is happening? We accept that it may make mistakes, but would not such a document at least help businessmen to know the kind of economic environment that the Treasury believes exists?

The Earl of Caithness

My Lords, the noble Lord will not have long to wait for the Autumn Statement; it will be made on 12th November. All noble Lords will agree that a stable economy and a consistent growth pattern is the best environment in which business can operate.

Viscount Montgomery of Alamein

My Lords, will my noble friend say what constitutes a reputable forecaster and how many there are?

The Earl of Caithness

My Lords, I was merely picking up the point made by the noble Lord, Lord Ezra, about forecasting. Someone once said that trying to run the economy was like trying to pull along a brick with an elastic band.

Lord John-Mackie

My Lords, what does the Minister consider will be a successful conclusion to the GATT round?

The Earl of Caithness

My Lords, a successful conclusion will be the signing of the GATT round. That would increase world trade considerably, give opportunities for British businesses which do not exist at present and prevent a protectionist system.