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Budget Resolutions and Economic Situation

This is the last day of the debate on the Budget proposed last week by my right hon. Friend the Chancellor. I want to focus on the Budget far as it affects business in this country, because we live in a time of massive and rapid economic change that will affect each and every one of us as individuals, and which brings new challenges for British businesses and for our economy. This budget will help us to meet those challenges. It encourages investment to build Britain’s long-term future. There are measures to help us deal with the consequences of the economic changes to the world climate, as well as measures to increase prosperity. The Chancellor was able to achieve that against a background of a strong and stable economy, which is enjoying the longest period of stability on record. We expect the economy to grow with historically low mortgage and interest rates—just half those of the 1980s and 1990s. If we are to compete in the new global economy, we need to invest. We need to invest in transport and other infrastructure, and in education and skills and science, and we must also ensure that we have a flexible and highly skilled work force. For businesses, we need to create the right environment to encourage innovation and a tax structure that encourages investment and research and development. Ten years ago, we had the lowest level of investment of the G7 countries, but now, alongside North America, we have the G7’s fastest growing business investment. It has risen in real terms by 48 per cent. since 1997. In the last quarter of 2006, total business investment rose by 4.5 per cent. and manufacturing investment by 3 per cent. Compared with 2005, total business investment rose by 13.5 per cent. and exports of goods and services are also up. Britain is seen as a good place to do business. We are well placed in respect of ease of doing business. We also have a worldwide reputation in many areas, such as pharmaceuticals, where almost 20 per cent. of prescription medicines are developed in the United Kingdom. It is not only the new industries that are doing well; established industries are doing well, too. The automotive industry has had its problems, but it produced more than 1.5 million vehicles last year, almost reaching the number of vehicles that were produced in the 1970s, which is regarded as the heyday of British car, van and lorry manufacturing. There is a new model of Mini, and Nissan has the most productive plant in Europe. There are many other examples that show that the British car industry is doing well. The names might be different from those of 30 years ago, but the success is noteworthy. The aerospace industry has a turnover of £22 billion, and the Department of Trade and Industry supports research and development— £153 million in the last year. There has also been success in that industry. I hope that, with the award of new work on carbon technology in relation to Airbus, there will continue to be developments in that sector. In new hi-tech sectors, the UK environmental industries are growing at 10 per cent. a year, providing a total of 100,000 jobs in the next 10 years, and our bioscience industry is the second biggest in the world after that in the US. British industry is doing well in those sectors, as it is in nanoscience and nanotechnology research, where our academic standing is world class. That needs to be converted into commercial success, as those are the areas in which we will have to compete in the future.