I want to make more progress.
There are two reasons why the current account deficit has appeared. It is not because of a lack of competitiveness but rather because of excess demand and an investment boom that has exceeded domestic savings. I am sure Opposition Members know that by definition the current account is the difference between domestic savings and investment. If a nation invests more than it saves, the current account will be in deficit; if it saves more than it invests, the current account will be in surplus.
There has been a fall in personal savings to which my right hon. Friend the Member for Worthing and my hon. Friend the Member for Croydon, South (Sir W. Clark) referred, although that so-called fall in personal savings has to some extent just been the product of mortgage borrowing; the rise in home ownership has increased personal borrowing and reduced the net figure of personal savings. Although there has been some fall in personal savings, it has been offset by company saving and by the large surplus that the Government have run in their finances. The point is that by far the larger part of the current account deficit has come not from the fall in savings, which has been relatively small, but from higher investment. That is what the current account deficit reflects—an investment boom, not a savings slump.
My hon. Friend the Member for Horsham (Sir P. Hordern) pointed out that we are extremely fortunate in the overseas investment that we have built up over the years. Of course, we did not have and could not create such overseas investment when the Labour party was in power. That is the real strength of the balance sheet of Britain plc. It shows that Britain is in a very strong position because we have overseas assets that are the third largest in the world after Japan and Germany, and, as a proportion of GDP, the biggest in the world. Even in 1988, when we had a large current account deficit, those overseas assets increased in value, which is evidence that the oil surpluses about which Opposition Members are so concerned were wisely invested and are bringing benefit to the people over the years.
The right hon. and learned Member for Monklands, East castigated the Government over their inflation record when he claimed to be reviewing the economic progress of the decade. As my hon. Friend the Member for Suffolk, South (Mr. Yeo) pointed out, if he wanted to compare inflation in the 1980s with inflation in the 1970s, he might at least have admitted that inflation under this Government has never exceeded the heights that it reached under Labour. He cited the underlying rate of inflation. Our 6·1 per cent. highest rate of underlying inflation since 1983 is lower than it ever was under the Labour Government. That is the reality of the difference between our inflation record and Labour's.
The right hon. and learned Gentleman has an excuse for this difference. He always said that inflation under the Labour Government was due to oil. He says that everything that went wrong under the Labour Government was because of an oil crisis, while everything good that has happened under this Government has also been due to oil, never to anything that the Government have done.