UK Exports (Hansard, 18 December 2002)

§ Lord McIntosh of Haringey
My Lords, although the United Kingdom economy continues to perform well, we are a very open economy and therefore not immune to last year's global slowdown. UK exports have been affected by the depressed level of demand in many of our main overseas markets.
654 The Government are working to improve the United Kingdom's competitiveness in order to narrow the productivity gap with other countries through policies that spur enterprise, promote competition and encourage innovation, investment and the acquisition of skills.

§ Lord Ezra
My Lords, is the noble Lord aware that the deficit in trade in goods in October was the worst since records began to be kept in 1697? Is that not indicative of a real crisis in the economy with a buoyant consumer demand largely being met by imports and our own manufacturing sector, together with productivity and capital investment, being in the doldrums? Is that not an issue that requires much more attention than it appears to be getting at present?

§ Lord McIntosh of Haringey
My Lords, I know that if I attempt to put the figures in context I shall be accused of complacency. I hope that my original Answer made it clear that we are not in any way complacent about the problems, and in particular the export problems, of the manufacturing industry in this country.
Although October's trade in goods was the highest cash deficit in history, it nevertheless represented only 3.4 per cent of gross domestic product. There have been many higher figures—as much as 4.8 per cent in 1989. At the same time, we have had surpluses in both services and in investment income—surpluses of £0.9 billion in October and of £2.8 billion in investment income in the second quarter of this year.

§ Lord Brookman
My Lords, my noble friend will be aware of the difficulties that heavy industry in the United Kingdom has—in particular the steel industry. Has he any further information as to what could be termed the "wicked" American protectionism that affects not only steel imports from the United Kingdom but also from elsewhere and other products that affect our manufacturing industry in general? What is America's position now?

§ Lord McIntosh of Haringey
My Lords, I am sorry to say that there has not been a reversal of America's position on steel imports. We are still in negotiations with them. We still feel very strongly—we made clear at the time—that the protectionism shown in favour of the United States' steel industry is an abuse. We are strongly opposed to it.

§ Lord Stoddart of Swindon
My Lords, can the noble Lord confirm that in 1973 the proportion of our GDP represented by manufacturing was 32 per cent and that it has now dropped to 18 per cent? Can he also confirm that out of 28 million employees, fewer than 4 million are now employed in the manufacturing industry?
Can the Minister tell us to what level employment in manufacturing industry will need to fall before we believe that there is a crisis that needs to be confronted?

§ Lord McIntosh of Haringey
My Lords, the figures of the noble Lord, Lord Stoddart, are almost entirely 655 accurate. My figure is 19 per cent for manufacturing industry, but that is still enormously important for us because it represents the majority of our exports and 4 million people employed in manufacturing. But again, I hope that I am not accused of being complacent if I put it in context; in all the major developed countries of the world, including the United States, France and Germany, there has been a similar decline in manufacturing as a proportion of their gross domestic product.

§ Lord Mackie of Benshie
My Lords, can the Minister tell the House whether the gap is wider with the European Union or with the rest of the world?

§ Lord McIntosh of Haringey
My Lords, of the figure of £3.6 billion deficit in goods in October of this year, which was the basis of the original Question, £1.2 billion was in trade with the European Union and £2.4 billion was with the rest of the world. Since approximately half our trade is with the European Union, it will be seen that proportionately our deficit with the European Union is lower.

§ Lord Ezra
My Lords, while talking of the European Union, is it not a fact that the very comparable economies of France and Germany show very positive balance of trade surpluses while going through the same difficulties as we are? How is it that we seem to be so much worse off?

§ Lord McIntosh of Haringey
My Lords, I think the basic answer to that was contained in my original Answer: we are and always have been a very much more open economy than many other European countries. We have a higher proportion of our gross domestic product involved both in exports and in imports with major markets around the world. Therefore, we have been particularly vulnerable to the slowdown. When one recalls that the growth in world trade in the year 2000 was 12 per cent and that there was no growth at all in world trade in the year 2001, one can see the kind of problems that we are facing.