Mr Major’s Comments on the Economy (II) – 22 April 1993

April 22, 1993 admin 1993, Inflation, Interest Rates, Unemployment

Below is the text of Mr Major’s comments on the economy, made during an interview held in London on Thursday 22nd April 1993.

QUESTION:

[Mr Major was asked if the recession was over and the recovery started].

PRIME MINISTER:

The economic indicators are looking a lot brighter. We’ve had a whole range of figures that were rather better than many forecasters imagined. I am very pleased to see that but I think we must wait until we see GDP figures in due course.

QUESTION:

[Mr Major was asked if this was just a modest rebound after a large recession].

PRIME MINISTER:

Well it is a pretty remarkable “modest rebound” as you put it, when you see almost every indicator moving in the same direction and doing so quite sharply. Normally, when one emerges from a recession it tends to be rather more jagged and rather more uncertain so I think the trend is undoubtedly in the right direction.

QUESTION:

[Mr Major was asked if unemployment falling was just a one off].

PRIME MINISTER:

We will have to wait and see, won’t we? It is certainly very welcome to see for the last two months that unemployment has fallen and of course three months ago, if you remember, the unemployment rise was actually rather small so it is three months where the unemployment figures have been better than people imagined.

The level of unemployment is still far too high and we need to get it down. That is why we said some time ago that need a base of low inflation from which we can have an expanding, growing economy. That is the only way to have secure jobs.

QUESTION:

[Mr Major was asked about the high PSBR].

PRIME MINISTER:

I wonder what you or most other people would have said to me if I had actually cut public expenditure in the midst of the recession? I think many people would have thought that would have been a rather strange way to deal with it.

A large part of the Public Sector Borrowing Requirement is cyclical. It is a collapse of income during the recession: no house sales – no stamp duty; no high street sales – far less value added tax; fewer people in work – a loss of income tax. As that begins to correct itself, a large part of the deficit will itself disappear. There will be more. We shall need some growth. We shall need to look very carefully at public expenditure.