§ Mr. AllenTo ask the Prime Minister if she will make a statement on the changes in the economy and exchange rate mechanism which have occurred since her reply on 30 January 1986,Official Report, column 1091.
§ The Prime MinisterSince the first quarter of 1986 the underlying improvement in the economy seen since this Government took office in 1979 has continued. Up to and including the second quarter of 1990, output rose by 15.5 per cent., business investment increased by 44 per cent. and real personal disposable income was 23 per cent. higher. By March this year there were over 2.5 million more people in work and in August unemployment was over 1,400,000 lower. A period of over-rapid demand growth in 1987 and 1988 led to a resurgence of inflationary pressures, but tight monetary policy has now slowed demand, and a fall in inflation will shortly follow. Since 30 January 1986 both the peseta and the pound sterling have joined the exchange rate mechanism. The lira moved from wide to narrow bands within the mechanism earlier this year. Between January 1986 and January 1987 there were three other realignments of central rates within the system.