To ask the Chancellor of the Exchequer what is his assessment of the effect of high interest rates on the level of unemployment.
To ask the Chancellor of the Exchequer what is his assessment of the effect of low output growth in 1990 on the level of unemployment.
A period of high interest rates and slow output growth is necessary to defeat inflation. The precise effect of this on unemployment depends crucially on whether wages growth slows as well.
Is the Minister aware that the principal reason for the present large number of bankruptcies is high interest rates? What words of comfort can he give to firms teetering on the brink of collapse?
As my right hon. Friend has repeatedly made clear, a slowdown is necessary so that we can get on top of inflation, and continuing high inflation would do immense damage to all companies, and it is essential for their prospects that we get inflation down.
Mr. Harry Cohen. Is he here? [HON. MEMBERS: "Yes."] The hon. Gentleman may not have heard the whole answer, but he may ask his supplementary question.
Does the Minister believe that the rise in unemployment—by 36,000, in the south-east alone—is a sign of a successful economic policy? Will not unemployment increase enormously in the next two years as a result of the Government's policy of slowing down growth and output because they had overheated the economy in the first place?[Interruption.]
Order. It was not too bad.
I was going to congratulate the hon. Gentleman on his quick thinking, but he has merely repeated what he has said many times before. It is noticeable that this is the first time for many months that Opposition Members have mentioned unemployment. They never mentioned it when we had 36 months of a continuing fall in unemployment. They never acknowledge that we still have unemployment which is below the European Community average, that we have a good rate of growth in jobs and that our record compares well with those of other countries and with that of the Labour party.
Is not it as true now as it was under the previous Labour Administration that one man's pay increase is another man's price increase, that unearned pay increases are a major contributing factor to inflation, and that that is the real cause of unemployment?
It is certainly true that excessive wage claims have a considerable bearing on unemployment. They can cause unemployment, and the unions must judge that. I think that they have to stand by the results of their decisions. They are not my words, but those of the right hon. and learned Member for Monklands, East (Mr. Smith).
Does my right hon. Friend agree that our successful trade figures for several months now give the lie to the fact that we have poor upward growth and demonstrate that successful British companies are doing well? Is not that reinforced by the fact that Norton is taking over a West German company, and does not it show that British industry should not be written off, as it is by the Opposition?
In recent months exports have been growing faster than imports, and last month's trade figures were the best for three years. The slowdown in the economy is having a beneficial effect on the current pound, as well as being designed to bring about a reduction in the rate of inflation.