The hon. Gentleman is a traditional Labour party member, and I respect him. He is utterly consistent-I, too, have been utterly consistent. I say to him in a very friendly way that there will be people in both our parties who say that we have been consistent, but consistently wrong. I do not believe that that is case. There is some justification for his view about public ownership, although I do not share it. I believe that companies have sold out and been taken over because of the structure of our tax system and for other reasons that relate to running large companies in this country. I would like many more companies to remain in the ownership of people who live in this country. The hon. Gentleman and I share that view.
Let me now consider the Budget. Although welcome growth is returning to world economies, even though it is a mere 0.4 per cent. in the United Kingdom, that must not be seen as the end of the crisis or the recession. Some might say that the Government's action to date has merely postponed the inevitable trouble that lies ahead because of the UK economy's underlying structural problems.
The banking crisis was a symptom of the problem, not necessarily the cause. Since the UK's departure from the exchange rate mechanism, our record of gross domestic product growth has consistently exceeded that of the rest of the European Union countries. The UK was renowned for its open markets, low regulation and relatively benign tax regime. Although markets here remained open, regulation and taxation increased markedly in the past decade, as did public expenditure and leverage. The result? The UK's growth was increasingly driven by unsustainable factors, which, if not reversed, will undermine our long-term potential for recovery. While the UK's economic advantages were eroded, growth was based on several one-off factors, and the underlying economy became unbalanced. As many of us know, it was biased towards property, finance and the public sector, all fuelled by high and increasing debt.
The composition of the UK economy has evolved rapidly. Back in 1978, 26 per cent. of the population worked in the manufacturing sector. Today, that figure is just 8.9 per cent. In the same period, the proportion working in banking and finance rose from 10.5 to 20.1 per cent. As most of us know, the rise in public sector employment has also been significant, especially in the past decade, with more than 1 million public sector jobs created, taking the total in this country to 6.1 million. That trend has continued, even during the recent severe economic downturn, partially explaining the fact that unemployment has not risen as sharply as expected in the crisis. The Secretary of State for Work and Pensions highlighted that in her opening speech.
During my 39 years as a Member of Parliament, I have never forgotten that Macclesfield's economic success has historically been based on manufacturing industries, including textiles, pharmaceuticals, which the right hon. Member for Rother Valley mentioned, aerospace and paper and board. I have put the question to the Prime Minister, as I put it now to those on the Treasury Bench: does the Treasury agree that manufacturing industry is one of the only sources of non-inflationary, sustainable economic growth? Does it also agree that if it is to be competitive and succeed in future, it needs more regulation, particularly from the EU, and more taxation like it needs a hole in the head? I hope that Ministers agree and will refer to that when winding up the debate.
As a nation, we ignore at our peril the value of our manufacturing industries to the stability and future success of our economy. I repeat that manufacturing is the only source of sustainable, non-inflationary economic growth. As the right hon. Gentleman said, some of the problems that we have encountered recently are due to our forgetting that; we have not appreciated the value of manufacturing to our economy. The UK's manufacturing base is now relatively small, and although it should benefit from sterling's depreciation, it is sadly no longer significant enough to drive domestic GDP growth, at least in the short term.
The fall in the value of the pound, making UK goods cheaper abroad, might have been expected to boost sales overseas. The sharp fall in the value of the pound in the past year should be doing more to help exporters. Sterling's slide has also contributed to the rapid rise in fuel and oil prices, which add inevitably to industry's costs. The Government should drop the proposed 3p per litre rise in fuel, even though that will now be spread over some nine months. It is a heavy cost to industry as well as to the domestic driver.
On the face of it, a 6 per cent. drop in exports in January from December should be worrying-I believe that it is. If British companies are producing fewer goods and services than expected for overseas markets, that will hardly help the overall growth picture for the first quarter of this year. It is possible that the severe weather in January and February held up traffic from factories to ports, and therefore had an effect on exports.
I am happy to give credit where it is due, so I am pleased to say that some employer surveys suggest that there has been a modest rise in optimism among exporters. I hope that that is the reality and that it continues. UK manufacturers may have taken advantage of a weaker sterling to increase their profit margins rather than to increase sales. There is no doubt that the sharpest fall in the value of sterling since the war happened at a bad time for exporters to take proper advantage, and it is perhaps unsurprising that they tried to extract every last penny out of the demand that remained for their products and manufactured goods. However-and this is a worrying statistic-the trade gap in physical goods widened to £7.99 billion, well above the £7 billion that economists had forecast.
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