I do not think that the House is under any illusion but that the vote at 10 o'clock is a vote of confidence in the financial and economic policies of Her Majesty's Government. The circumstances which make this vote necessary inevitably surround the debate with intense political excitement, and the flames have been fanned by party hopes and fears.
I start by responding to the Leader of the Liberal Party and by trying to identify at least some areas about which I hope we can agree. First, the economic problems facing the United Kingdom at this time are the most serious and difficult it has faced since the war. We have at the same time, like all other industrial countries, unemployment without precedent since the war, allied with inflation without precedent since the war. All countries in the industrial world face this combination of problems because of the explosion in oil prices and the fact that the world is faced by the biggest recession since the 1930s.
Our inflation rate is still a good deal higher than that of most other countries. Our unemployment rate is still lower than many. We entered the oil crisis with
an economy that was far weaker than that of any other industrial country in the world. Growth in Britain came to a halt in the second half of 1973 and fell heavily in January and February 1974, owing to the three-day working week. The balance of payments was running at an appalling deficit in 1973 and the Governor of the Bank of England, speaking on 15th January 1974, well before the General Election, used these words:
Last year the current account showed a large deficit which, this year, will be further greatly increased by the rise in the price of oil.…But even before that factor became important, our balance of payments deficit on current account in the last quarter of the year"—
was running at a rate equivalent to 4 per cent. of our national product"—
—that is, a rate of about £4,000 million a year.
That was the situation which faced this Government when they took office.