'My first priority has been to sustain the economic recovery now under way and to create the right climate for growth and jobs. I have been determined to take no risks with inflation. We have brought inflation down to the lowest level for a generation and low inflation must now remain a permanent feature of the British economic landscape.
'To achieve these objectives, the task of my first Budget has been to set the Government's finances on a sustainable path for the rest of the decade. To make the decisions necessary now to secure lasting recovery and rising living standards in the future. The Financial Statement and Budget Report, together with a number of press releases filling out the details of our spending plans and my Budget tax proposals, will be available from the Vote Office as soon as I have sat down.
ECONOMIC SITUATION AND PROSPECTS: Mr Deputy Speaker, Britain's economic performance this year has been encouraging. It is now clear that the recovery started in the first half of 1992, well before sterling's departure from the Exchange Rate Mechanism. GDP has risen for six successive quarters. And in 1993 as a whole, I now expect the economy to grow by about 1 3/4 per cent.
As a result, despite the weakness of activity in the other major European countries, Britain's trading performance over the last year has been excellent. Exports to countries outside the EU were up by no less than 14% in the last three months compared with a year ago - a sharp increase in our market share. After the last three difficult years, that performance convincingly demonstrates the strength of British manufacturing today. Continued growth in consumer spending, together with further increases in exports and investment, should bring faster growth in 1994. Economic forecasting is an unreliable art, to which far too much importance has been attached in recent years. But on the best judgement I can make, growth next year should be about 2 1/2%.
With considerable spare capacity in the economy, inflationary pressures remain subdued. The tax measures announced in March, and the further measures I shall be announcing today, will push inflation up a little in the next few months. But this should not feed through into higher inflation over the medium term. I expect underlying inflationto remain inside the Government's 1-4% target range over the year ahead, and to decline steadily into the lower half of that range by the end of this Parliament. Monetary policy will continue to be directed towards meeting that objective.