Autumn Statement

Part of Prayers – in the House of Commons at 2:53 pm on 8th November 1990.

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Photo of Mr John Major Mr John Major , Huntingdon 2:53 pm, 8th November 1990

We shall add to that this year.

The main objective of economic policy at present must be to bring inflation down, but, as we do so, the short-term prospect is bound to be one of weak activity. [Interruption.] In the past, during similar periods the ratio of public spending to national income has risen strongly. On this occasion it will not.

Planned public expenditure in the current fiscal year is now expected to be £180·6 billion, rather less than 1 per cent. above the planning total set a year ago. A large part of this extra spending is due to an increase in the financing requirements of the nationalised industries, to a surge of common agricultural policy spending on agricultural market support and to expenditure on the Gulf crisis.

Notwithstanding this cash overrun, public expenditure remains under tight control. Inflation has been higher than forecast, but it has not been allowed to feed through fully into expenditure. As a result, the ratio of spending to national income in the current year is likely to be slightly lower than projected at the time of the Budget—virtually unchanged from the 1989–90 level.

The decisions on public expenditure for the next three years have been taken against a more difficult world and domestic economic background than for some time. Activity at home and abroad has begun to weaken and some countries such as Canada and the United States are expected to grow very slowly indeed over the coming year. The outlook has also been complicated by events in the Gulf, with the rise in oil prices and the uncertainty that they have produced. Against that background, our new plans are designed to protect the most vulnerable groups in society against the effects of higher inflation [Interruption.] I repeat, to protect the most vulnerable groups in society and to maintain longer-term policies to improve the working of the economy.