Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 5:01 pm on 17th March 1988.

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Photo of Kenneth Clarke Kenneth Clarke Chancellor of the Duchy of Lancaster, Minister of State (Department of Trade and Industry) 5:01 pm, 17th March 1988

If jobs are being advertised in job clubs at below the legal minimum rates, those allegations will be investigated. My right hon. Friend the Secretary of State for Employment has just told me that the one allegation of that sort that he has received has been dealt with.

The idea that the increase in employment is a low-wage increase is absurd. The general level of earnings in the British economy is rising rapidly. Indeed, if there is one cause for concern about the continuing fall in unemployment in this country, it is that we are beginning to slip back into the practice of paying ourselves rather too much, a little too quickly, which will slow up the fall in unemployment.

As far as I can see, the shadow Chancellor said that the excellent climate, which I have just described, is threatened mainly by the adverse balance of payments. The allegation is being made that we are facing a slow-down in growth because of the balance of payments problems that are being foreseen by some of our critics. His predecessor as shadow Chancellor, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), was making exactly the same predictions of a serious balance of payments crisis 12 months ago. In early 1987 he was saying that the balance of payments deficit would be £14·5 billion for the coming financial year. Last year's current account deficit is now estimated at £1·7 billion. Again, my right hon. Friend the Chancellor erred on the side of caution. His estimate last year was rather more than the outturn for the balance of payments deficit. It is not too surprising that we are facing a slightly adverse balance of payments. The principal reason is that the United Kingdom economy is growing faster than that of most of our main competitors. This is making the British market the one to go for as far as most of our competitors are concerned.

The volume of visible exports that we achieved was 5·5 per cent. higher in 1987 than in 1986, but at 7·5 per cent. visible imports rose somewhat faster because our market was expanding faster than the markets abroad to which we were selling. But those imports were not all, or even mainly, consumer products; a high proportion of imports were raw materials and intermediate goods for industry. That is the kind of increase in imports to be expected at a time of more rapid growth of our own industry. My right hon. Friend has predicted a rather larger current account deficit of £4 billion for 1988, which is easily sustainable by our present performance.