Parliamentary Search

Written question asked by Vincent Cable (Liberal Democrat) on Tuesday, 3 December 2002, in the House of Commons. It was due for an answer on Tuesday, 10 December 2002. It was answered by John Healey (Labour) on Tuesday, 10 December 2002 on behalf of the Treasury.

Treasury

Question
To ask Mr Chancellor of the Exchequer, what estimate he has made of the impact on his projected GDP growth in 2003 and 2004 of an average oil price of (a) $30 in 2003 and 2004, (b) $40 in 2003 and $30 in 2004; and (c) $60 in 2003 and $40 in 2004.
Answer

Dr. Cable: To ask the Chancellor of the Exchequer what estimate he has made of the impact on his projected GDP growth in 2003 and 2004 of an average oil price of (a) $30 in 2003 and 2004, (b) $40 in 2003 and $30 in 2004; and (c) $60 in 2003 and $40 in 2004. [85648] John Healey: By raising production costs and so constraining supply, higher oil prices tend to depress GDP growth, simultaneously pushing up inflation and unemployment. The UK differs from most other major industrialised economies in that it is a small net exporter of oil. Potential GDP losses therefore may be partly offset by increased UK incomes deriving from North Sea production due to the improvement in the terms of trade. In practice, the overall economic effects from rising oil prices are difficult to estimate as they depend largely on second round impacts on wages and other prices, as well as movements in business and consumer confidence.

Secondary information

Type
Written question
Reference
396 c264W; 85648
Session
2002-03
Subjects
Economic growth Oil Prices
Link
View this Written question on www.publications.parliament.uk