Balance of Trade

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 11th June 1992.

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Photo of Mike Hall Mike Hall , Warrington South 12:00 am, 11th June 1992

To ask the Chancellor of the Exchequer when he next expects Britain's balance of trade to be in surplus.

Photo of Mr Michael Portillo Mr Michael Portillo , Enfield, Southgate

The "Financial Statement and Budget Report" forecast for the current account was for a deficit of £6½ billion in 1992 and £9 billion at an annual rate in the first half of 1993. Forecasts for future years are not available.

Photo of Mike Hall Mike Hall , Warrington South

That reply from the Chief Secretary in no way answers my question to the Chancellor of the Exchequer. I will ask the question again because that answer demonstrates the Government's dangerous contempt for our balance of trade deficit. Will the Chief Secretary answer the specific question: when will our trade next be in surplus? Will he tell the House whether he agrees with the advice of the President of the Board of Trade to the Conservative Government not to argue that the balance of trade deficit is easy to manage and would not be a problem for the Government to cope with?

Photo of Mr Michael Portillo Mr Michael Portillo , Enfield, Southgate

The hon. Gentleman's substantive question was answered in what I said. I told him that we made no forecasts beyond the first half of 1993. He asked about the sustainability or manageability of the current account deficit. At about 1 per cent. of gross domestic product it is indeed sustainable. At present we are seeing a substantial inflow of investment into this country. There is strong investment in particular from the United States and Japan, which tends to demonstrate that there is no difficulty in funding the deficit.

Photo of John Greenway John Greenway , Ryedale

Although that inward investment is particularly welcome, does my right hon. Friend agree that in terms of Britain's balance of payments our overseas investment into other countries has increased in value in the past year by substantially more than our trade imbalance?

Photo of Mr Michael Portillo Mr Michael Portillo , Enfield, Southgate

My hon. Friend makes a good point. He will recognise that that inward investment helps the very significant growth that there has been in our exports. Our growth in manufactured exports is showing up now compared with world trade. During the 1980s the proportion of our manufactures fell as part of world trade. Since 1988, there has been a marked increase.

Photo of Mr Harry Barnes Mr Harry Barnes , North East Derbyshire

If the Minister will not give an estimate of when we shall next be in surplus, will he give us a guess?

Photo of Mr Michael Portillo Mr Michael Portillo , Enfield, Southgate

I made this perfectly clear to the hon. Member for Warrington, South (Mr. Hall). We have produced a forecast for 1993. Our export volume is extremely high. We are now seeing some increase in imports which, because they tend to centre around basic materials, provide some evidence of recovery which the hon. Gentleman should welcome.