Gross Domestic Product

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 18th April 1991.

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Photo of Mr Stan Orme Mr Stan Orme , Salford East 12:00 am, 18th April 1991

To ask the Chancellor of the Exchequer what is the average annual growth rate for gross domestic product at factor cost from 1979 to 1991 using his Budget forecast for gross domestic product growth in 1991.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

Does the Minister agree that that figure does not compare favourably with the record of the Labour Government between 1974 and 1979? The unemployment figures disclosed today, and the further decline in manufacturing industry, are partly responsible for the problems that we face. What will the Government do to rectify them?

Photo of John Maples John Maples The Economic Secretary to the Treasury

My hon. Friends will be amazed that the right hon. Gentleman should give me the opportunity to remind the House of the terrible state of the British economy in 1979 after five years of socialist mismanagement. Public spending was out of control, public borrowing was more than 5 per cent. of gross domestic product and there was incipient hyper-inflation. It took a little time to sort that out, but between 1981 and 1991, under this Government, the economy grew at just under 2½ per cent., compared with 1·4 per cent. between 1973 and 1979.

Photo of Mr William Clark Mr William Clark , Croydon South

Will my hon. Friend make a conjecture about what would happen to gross domestic product if income tax were increased from 50 to 59 per cent., with an income surcharge of 9 per cent., giving a total of 68 per cent? Would not that terribly affect our gross domestic product?

Photo of John Maples John Maples The Economic Secretary to the Treasury

My right hon. Friend is right. It would be a rerun of the last half of the 1970s, when annual capital formation fell to one third of 1 per cent. a year, manufacturing output declined by 1½ per cent. a year and inflation averaged 15½ per cent.

Mr. John Smith:

Will the Minister reflect on the significance of his answer that growth under the Government is 1·75 per cent. below the trend growth of the previous two decades? Is not that ample proof that the so-called transformation of the economy is complete rubbish? Growth is well below 2 per cent. and negative growth is causing high, dramatic unemployment, from which our people are suffering.

Photo of John Maples John Maples The Economic Secretary to the Treasury

I said in answer to the right hon. Member for Salford, East (Mr. Orme) that we inherited an enormous problem. What happened in the first two years of this Government can be laid at the door of five years of socialist mismanagement. In the 1980s, the British economy grew faster than the German, French or Italian economies, investment and manufacturing productivity grew faster and we were on top of a league which, during the 1960s and 1970s, we were bottom. What is the difference? In the 1960s and 1970s we had Labour Governments.