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Economic Growth

Volume 129: debated on Thursday 10 March 1988

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11.

To ask the Chancellor of the Exchequer what is the current rate of economic growth.

The Autumn Statement forecast growth in 1987 of 4 per cent. I shall be presenting my latest estimate in my Budget next week.

Is it not good news that the 1980s have seen the fastest sustained period of economic growth since the second world war, with considerably faster growth than our European competitors? Does the Chancellor feel that the country has yet fully come to terms with our rise up the international league table from the relegation zone to championship status?

My hon. Friend makes a very good point. Certainly it is the case that during the 1960s and 1970s we had the lowest rate of economic growth of all major European countries, and that during the 1980s we have had the highest. I think that the country has an inkling of this, and that may have accounted, among other things, for the general election result last year. But Opposition Members seem to find it particularly difficult to hoist this on board.

If the Chancellor is right in saying that things are going so very well, why will he not give the National Health Service a better deal?

In the Autumn Statement in November I announced the biggest increase in spending on the National Health Service that had ever been announced for any one year.

Will my right hon. Friend concede that the present growth rate is not sustainable, and, since it is now claimed that he does not have the political support of the Prime Minister for maintaining the pound in the European exchange rate mechanism, will he reintroduce monetary controls?

I do not know what my hon. Friend means by monetary controls. It sounds like some kind of socialistic intervention, which I would certainly not endorse.

If the Chancellor is so confident about the prospects for economic growth in the coming year, would he care to reflect on the continuing low level of investment, the worsening balance of trade, the worsening balance of payments and now, it would appear, the pound going into free float against the deutschmark? The Chancellor said very clearly on 10 November that his objective was to keep the rate below Dm 3. He used to be proud of having devised what he called managed floating. Is it not now rather less management and rather more floating?

I stand entirely by what I said at the September meeting of the International Monetary Fund, and there was nothing about Dm 3 there. The Financial Times must have been mistaken on that point. More fundamentally, the hon. Gentleman is wholly mistaken, because what is being shown at the present time is the confidence of the world in the British Government and the economic policy and the economy of this country.

While congratulating my right hon. Friend and the Government on what they have achieved for the economy of our country, and while industry can certainly cope with relatively high interest rates, may I ask whether he is not now a little concerned about the exchange rate, because this may well undermine the competitive position of British industry in the world?

I entirely understand what my hon. Friend is saying. Clearly, we do not want an excessively high exchange rate, but, by the same token, nor are we prepared to see attempted salvation through devaluation, which is espoused by the Opposition, but is the route to higher inflation.