Oral Answers to Questions — Inflation

– in the House of Commons at 12:00 am on 17 April 1986.

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Photo of Mr Kenneth Carlisle Mr Kenneth Carlisle , Lincoln 12:00, 17 April 1986

asked the Chancellor of the Exchequer what is the latest estimate for the rate of inflation over the next 12 months.

Photo of Mr John MacGregor Mr John MacGregor The Chief Secretary to the Treasury

The latest forecast for inflation was given in the Budget statement. I expect the rate to fall to 3½ per cent. by the fourth quarter of this year.

Photo of Mr Kenneth Carlisle Mr Kenneth Carlisle , Lincoln

Does my right hon. Friend agree that we need lower interest rates if investment and the creation of jobs are to be helped, and that we need to control inflation if interest rates are to fall? Does he also agree that confidence is needed that low inflation will be sustained in future years? What are the prospects for this?

Photo of Mr John MacGregor Mr John MacGregor The Chief Secretary to the Treasury

The best prospects for maintaining low inflation are to keep a Conservative party in power. My hon. Friend knows that the lowest inflation rate during the whole period of the last Labour Government was above the highest inflation rate under this Government since the last general election. As my hon. Friend the Economic Secretary to the Treasury said earlier, interest rates have been reduced by 1·5 percentage points since the Budget because of prudent economic management and a prudent Budget. The continuation of low inflation helps with that trend.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Would inflation be higher if unemployment were lower?

Photo of Mr John MacGregor Mr John MacGregor The Chief Secretary to the Treasury

Inflation has come down because of the prudent economic policies that we have pursued. I believe that there is agreement between both Front Benches that one of the greatest contributions to employment is low inflation. The difference between us is that we are achieving the low inflation.