Trade Balance

Lord Anderson of Swansea Excerpts

Thursday 11th December 2014 Lords Chamber

[Lord Livingston of Parkhead]

The original Question was on the balance of trade, not the balance of payments; they are, of course, two quite different things. The balance of trade is in deficit to around £30 billion; it is a deficit of about 2% of GDP, which is significantly better than under the previous Government, when it was on average 2.5% of GDP. As the UK is growing much faster than its partners it is difficult to forecast exactly when it will come to zero. Certainly the OBR expects to see a significant improvement going forward, but I am reminded of the words of J K Galbraith, who said that the only purpose of economic forecasts is to give astrology a good name.

[Lord Anderson of Swansea (Lab)]

There has traditionally been a deficit on our balance of trade, but always this has been counterbalanced by a large surplus on our service industries. Will the Minister therefore pay tribute to them, including the creative industries and the City, for ensuring that?

[Lord Livingston of Parkhead]

The noble Lord is correct that services have been and remain a very strong surplus for the UK. It has to be recognised that, increasingly, services and goods are becoming intermingled. I know that when Rolls-Royce sells a jet engine, almost half the value is a service. One of the things that we should cease doing to a degree is separating off goods and services, because increasingly they are the same. I commend our creative industries, our professional and financial services, our aerospace sector and, indeed, our growing motor vehicle industry which, of course, is the second largest producer of cars in the whole of Europe.