I agree with my hon. Friend and, indeed, the evidence of the May survey was extremely encouraging. The script attached to it of the evidence from the CBI stated:
Evidence from the latest CBI surveys continues to suggest that the economic recovery is, at last, on the way … the CBI's latest economic forecast suggests that growth will resume in the second quarter of this year and continue throughout 1992 and 1993.
That was the opinion of the CBI and it is welcome.
What response does the Chancellor of the Exchequer have to the statement of Sir Antony Pilkington, the chairman of the St. Helens glassmakers who had to cut the dividend for the first time and see profits collapse, that the Chancellor is killing British industry and that he has not met one business man who can see any signs of any economic upturn whatever?
When considering calls from the CBI and others to cut interest rates, will my right hon. Friend consider the position in the United States where interest rates have been cut to 3.5 per cent. but where recovery remains elusive and long-term market rates remain almost as high as in this country? Does that not illustrate that the real problem is a shortage of capital in international markets and an imbalance between savings and consumption, particularly Government consumption, internationally? Bearing that in mind, does he agree that premature cuts in interest rates would exacerbate the problems by reducing incentives to invest?
My hon. Friend makes a good point in reminding us that the function of interest rates is to balance investment and savings. It is necessary both to attract the relevant amount of capital and to encourage savings. My hon. Friend is also right to emphasise that it is the long-term rate of interest which is particularly important for investment. Unless we have tight control of public spending it will be more difficult to get interest rates down. That is why my right hon. Friend the Chief Secretary to the Treasury is absolutely right that economy in public spending is essential.