asked the Chancellor of the Exchequer, further to his reply concerning the planned reduction of £3·5 billion in public expenditure, Official Report, 20 November 1979, c. 157–8, whether he has assumed (a) that the whole or most of the saving to the public will be reflected in an increase in incomes in the private sector and (b) that most of the resultant increase in incomes in the private sector will be saved or spent on imported goods.

My right hon and learned Friend has made no specific assumptions of the kind to which the hon. Member refers. The Government's public expenditure measures are an essential part of the economic strategy as a whole, and cannot be viewed in isolation. This strategy offers the only route to lower inflation and sustainable growth.