Gross fixed investment by manufacturing industry in 1958 is provisionally estimated to have been about £940 million. Forecasts recently provided by a sample of companies suggest that it will be about one tenth lower in 1959. I am circulating in the OFFICIAL REPORT a note on the qualifications attaching to this estimate.
Will not this have a grievous effect upon our future productivity and competitive power? Will the right hon. Gentleman consult the Chancellor of the Exchequer as to Budgetary means of increasing investment, even though that may be less electorally popular than lowering the standard rate of Income Tax?
Of course, the rate of investment is of great concern, but the hon. Gentleman may like to know that the forecast for investment in the private sector outside manufacturing industry is substantially up, so that we shall not suffer a fall in toto.
Following is the note:The estimate of a fall of about a tenth in manufacturers' capital expenditure in 1959 as compared with 1958 is based on returns received from companies during December and January following a request at the end of October last year for forecasts of their expenditure during 1959. This smaller decrease as compared with the estimate of a decrease of a sixth based on provisional forecasts made by companies during the summer of 1958 is not due to any real change in companies' intentions between the two sets of forecasts. It is a consequence of the fact that, as was to be expected, more companies were able to give forecasts of their 1959 expenditure at the end of 1958 than six months earlier. Estimates made from the later forecasts for 1959 by those companies who also supplied provisional forecasts still indicate a decrease of about a sixth between the two years. Those companies, however, who gave a forecast only at the end of the year have indicated smaller decreases for 1959 and their forecasts in consequence have combined with those from the other companies to lessen the expected decrease.