§ Mr. Austin MitchellTo ask the President of the Board of Trade what is his estimate of the likely effect on United Kingdom trade in 1996, 1997 and 1998 of reconstruction in the former East Germany; and if he will make a statement on his assessment of the extent to which the United Kingdom will become less competitive than Germany.
§ Mr. Ian TaylorGermany is the United Kingdom's largest export market. Over 1,000 British firms have subsidiaries or joint ventures there, and this country is among the leading investors in the new Länder.
Annual growth of 8 to 10 per cent. is expected in the new Länder over the next few years, and 2.5 to 3 per cent. in Germany as a whole. Britain's market share is on the increase, and there is no reason why this should not continue.
The Government have been active in developing trade promotion initiatives in key sectors of the new Länder which will help British companies, in the United Kingdom and in Germany, to capitalise on trade openings in 1995 and beyond.
Some of the newly established German plant in the new Länder is likely to be highly competitive but the prospects for UK firms are excellent. The gap in manufacturing productivity between this country and Germany has narrowed since 1979, and the Government remain committed to creating the right framework for improving industrial competitiveness. The United Kingdom's continuing ability to attract very significant inward 648W investment is a testament to the competitiveness policies that the Government are pursuing.