In the light of the facts that we have now had a deficit for 16 consecutive months, that in this calendar year the deficit is approaching £10 billion and that on the three-monthly figures the level of imports is growing at twice the rate of exports, should not the Chancellor give us a forecast now and, more seriously, tell us what he is going to do about it?
As I indicated, I have undertaken to make a new forecast in the Autumn Statement next month in the usual way. The hon. Member is quite right to say that imports are rising very fast. That is a consequence of domestic demand rising very fast, and I have taken steps to deal with that by raising interest rates substantially and tightening monetary conditions at a time when the fiscal stance is already very tight indeed, so the necessary steps have been taken.
As for exports, I think it is striking that today's figures confirm—
No, I would not rely on one month. I think it is very dangerous to take one month alone; but, taking the whole of the third quarter, exports are set at an all-time record level.
Is it not vital, if the balance of payments deficit is to be significantly reduced, that, over the next year, we should have wage restraint to enable British industry to become more competitive? Therefore, would it not be appropriate to use the prices and taxes index—which has gone up over the past 12 months by only 3·9 per cent., compared with the retail prices index at 5·9 per cent.—in wage negotiations? Will the Government set an example in public sector settlements by keeping the increases down to that lower figure?
The Government are certainly very conscious of their responsibility for public sector pay, at least in that part of the public sector where the Government themselves are directly the employer.
As for the wider issue which my hon. Friend raises, he is quite right in pointing out that the tax and prices index gives a more accurate account of the overall cost of living than the retail prices index does. It is certainly true that it is very much in the interests of companies and the economy as a whole that those companies keep firm control of their costs, including their wage costs, but that is a matter that they have to decide in the light of business conditions and in the light of what is happening with their competitors overseas. It is not a matter of being tied to a particular index.
Does the Chancellor accept that his policy of high interest rates will make it more difficult for businesses to borrow money to start investing and producing goods in this country and, therefore, make the balance of payments crisis even worse?
We are having at the moment in this country the greatest investment boom that we have known for a very, very long time, with manufacturing industry leading the way. Not only is there more investment going on, but it is profitable investment—really profitable investment—with a good rate of return on capital. That is something that we never had in the past, and badly lacked.
New businesses are being created net of those which have failed and those which have died. New businesses are being created this year at the rate of over 1,000 a week—every week this year. That is far higher than we have ever known before.
Is it not significant that expectations are now so low that the definition of an improvement is a balance of payments deficit of £4 billion over three months, of nearly £10 billion over the year and a trend in which imports are rising twice as fast as exports? Will the Chancellor answer the question that is posed directly by industrialists, by exporters and by small business men up and down the country: when will our interest rates fall to the level of those of our competitors?
Our interest rates will fall when it is appropriate for them to do so, and not before then. Really I have no idea what the hon. Gentleman's expectations are, but we shall no doubt discover.
As for the question on the current account of the balance of payments, I would be more impressed by his sudden latching on to the current account of the balance of payments if, during the six years on the trot—from 1980 to 1985—when we had a current account surplus, he was telling us how well we were doing. I do not recall that.