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Budget Proposals

Volume 113: debated on Wednesday 25 March 1987

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2.

asked the Secretary of State for Trade and Industry what effect he estimates the Budget proposals will have on the level of United Kingdom trade and commercial activity during 1987.

I expect the Budget proposals to contribute to a seventh successive year of growth in the economy.

Does my hon. Friend agree that the latest CBI survey bears out the Chancellor's statement that the prospects for output and exports are now better than they have been for many years? Should not the Bank of England follow the lead of my right hon. Friend the Chancellor of the Exchequer and reduce interest rates further, which would be of particular help to manufacturing industry in the north?

My hon. Friend is right about the survey, which was carried out before the Budget. The responses on order books and the expectation of future output were higher than at any point in the history of the survey. I have little doubt that next month's figures, which will be based on a survey after the Budget, will show an even higher level of confidence. Nor is that confidence confined to the United Kingdom. My meetings abroad, with such hardheaded judges as the Swiss and the Germans, show that they also believe that permanent and beneficial changes have taken place in the United Kingdom economy.

What does the Minister say about the value of the pound against foreign currencies? Is he satisfied with its current rise? Does he have any view on how far it should rise before it becomes counter-productive?

Hello! I thought it was only a few months ago that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was predicting a sterling crisis because the value of the pound might fall. Perhaps he and the hon. Gentleman should have a quiet word about the appropriate angle of approach on this subject.

Does my hon. Friend agree that he might he being unfair to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who predicted a stirling crisis, because the excellent policies that we are now following means that the pound is bound to be strong? Does he also agree that in this excellent Budget the Chancellor of the Exchequer did not want interest rates and the pound to go too high? Would not our best hope be for the Bank of England to follow the Chancellor's excellent lead?

We have many expectations and hopes, and whether that is the best my hon. Friend may be able to judge better than me. What is certain is that matters relating to the exchange rate and the value of our currency are entirely for my right hon. Friend the Chancellor of the Exchequer.

I hope that it will not have escaped the Minister's attention that the Chancellor predicted that at the end of 1987 our deficit on the balance of trade in manufactured goods will be £8 billion. What does the hon. Gentleman say about that? Does he agree with the Chancellor, who said, from a sedentary position, that that was neither here nor there? Does the Department of Trade and Industry share that thoroughly irresponsible view of the handling of Britain's economy?

Certainly, if there is one element in our trading affairs that is less satisfactory than others, it is that relating to manufactured exports and the balance of trade for manufactured goods. We do not deny that. However, that the Opposition should make such a meal of it, singling out the one element in our trading picture where they can find a deficit, is entirely unjustified. Our trade position has to be looked at in its entirety. Our manufacturing output continues to increase. It will increase by 4 per cent. Next year. As my right hon. Friend the Chancellor said in the Budget debate on Monday, the prospects for an improvement in that sector are increasing.