Mr Major’s Comments on the Economy – 9 January 1994

Below is the text of Mr Major’s comments on the economy during an interview given in London on Sunday 9th January 1994.

QUESTION:

[Mr Major was asked if inflation had been beaten].

PRIME MINISTER:

I do not think you can ever say inflation is beaten, I certainly would not say that. But if you look over the last 30 or 40 years, time and time again we have had a wave of inflation leading to stop/go policies and great damage to the British economy. What concerned me first and foremost, not just when I became Prime Minister but from the moment I became Chancellor, hence in many ways my enthusiasm for the Exchange Rate Mechanism at the time, was the need to get inflation down to the same level or lower than our principal international competitors and then make sure we can keep it there.

QUESTION:

[Mr Major was asked if inflation could be kept in the 1%-4% band for the rest of the Parliament].

PRIME MINISTER:

That is certainly our expectation and our ambition. One can never be certain because a certain element of inflationary impulse comes from abroad, but it will certainly be our intentions to keep it within those parameters. Provided we can do that we have the most solid and secure base for not just medium but long term sustainable growth both in employment in prosperity over the years immediately ahead and that I think is the central issue.

QUESTION:

[Mr Major was asked for his economic predictions for the year ahead].

PRIME MINISTER:

I made a number of predictions last year, one was unemployment, I said that it would fall and it did; I said that we would get a significant amount of growth, it looks as though we have got growth; I said that exports would increase, they have increased; and I said we would carry our legislation, which we did do. So I think last year’s predictions worked out, upon reflection, rather well. This year I would certainly expect the trend in unemployment to go down, that does not mean there will not be a single month when it goes not go up, I cannot say that, but I think across the year there is no doubt that the trend in unemployment is now downwards, so certainly I expect that, I am reluctant to put a figure on it, but I think there will be quite a reduction in unemployment in the next twelve months. We will certainly see more growth, I think we will see a continuing growth in exports and we will see quite a reduction in the fiscal deficit. So I think many of our prospects are looking sharply better at the beginning of 1994 than they were at the beginning 1993.

QUESTION:

[Mr Major was asked whether he thought the economy would grow by 3% in the year ahead].

PRIME MINISTER:

I think it will be in the 2.5 – 3 percent bracket, it is a fairly inexact science forecasting, there are too many intangibles, but it will be in that sort of bracket and I would certainly expect growth at that level or a little higher the year after.