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Balance of Trade

Volume 474: debated on Thursday 3 April 2008

11. What assessment he has made of recent trends in the UK’s balance of trade; and if he will make a statement. (198421)

The Secretary of State for Business, Enterprise and Regulatory Reform
(Mr. John Hutton)

The deficit in trade in goods and services remained at 3.6 per cent. of GDP in 2007, unchanged from the previous two years.

The Government have estimated that, for the whole of 2007, our total deficit in trade was £51 billion. What estimate has the Secretary of State made of the effect of a possible flight of non-doms, perhaps taking their businesses with them, on the trade figures for this year and next year?

The issue of non-doms and their tax status has been addressed and resolved by my right hon. Friend the Chancellor of the Exchequer. It is right that people who are non-domiciled for tax purposes should make a fair and reasonable contribution; we all accept that, and I am surprised that the hon. Gentleman does not, as those on the Opposition Front-Bench first proposed it. I have just two points to make about the trade deficit: it was much higher at some point in the 1980s than it is now, and, more importantly, UK competitiveness depends more on productivity, so I am glad to be able to say that on that we are narrowing the gap between the UK and our principal economic competitors.

Does my right hon. Friend accept, however, that a worrying long-term trend in terms of our balance of payments is the decline in manufacturing? The balance of payments in manufacturing has deteriorated: the deficit for last year was about £60 billion, which is enormous and, arguably, unsustainable. Given the current pressure in financial services and other sectors, is it not time for manufacturing to be given a strong lead, so that our manufacturers can make inroads into the manufacturing balance of payments deficit?

I strongly agree that we must always look to do what we can to support Britain’s manufacturing industries. It is worth reminding ourselves of something, however: there is a lot of talk about Britain being a post-industrial economy, but that is rubbish. It is not a post-industrial economy at all; Britain is the sixth largest manufacturing economy in the world, and we work very closely with manufacturing companies in the UK to ensure that our performance continues to improve. It is worth reminding ourselves of another important fact: export-led growth has been very strong in the past few years. The total value of the exported trade in goods rose by almost 8 per cent. this year, so we should not pay too much credence to the ne’er-do-wells and gloom-and-doom merchants on the Opposition Benches who predict the decline of Britain’s manufacturing industry.