# = pounds sterling

HM Treasury News Release
166/98                                       13 October 1998
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      CHANCELLOR'S SPEECH TO THE BRITISH RETAIL CONSORTIUM


Attached is an extract from the Chancellor, Gordon Brown's
speech to The British Retail Consortium Annual Dinner tonight.
 


 THE CHANCELLOR OF THE EXCHEQUER, GORDON BROWN, SPEAKING TO THE
         BRITISH RETAIL CONSORTIUM ANNUAL DINNER SAID:

"JUST AS WE MUST WORK WITH OUR INTERNATIONAL PARTNERS TO
SECURE GLOBAL STABILITY AND GROWTH, SO WE HAVE BEEN TAKING
ACTION AT HOME TO SET IN PLACE A LONG-TERM AND CREDIBLE
PLATFORM TO ACHIEVE THE STABILITY THAT IS AN ESSENTIAL
PRE-CONDITION FOR LONG-TERM INVESTMENT, GROWTH AND JOBS.

IT IS IN PURSUIT OF OUR LONG-TERM GOALS - HIGH AND STABLE
LEVELS OF GROWTH AND EMPLOYMENT- AND THE REJECTION OF THE
SHORT-TERMISM AND STOP-GO POLICES THAT HAVE UNDERMINED THE UK
ECONOMY IN THE PAST- THAT WE HAVE TAKEN TOUGH DECISIONS.

IN THE FACE OF RISING INFLATIONARY PRESSURE AND THE LARGE
STRUCTURAL DEFICIT WE INHERITED, WE MADE THE BANK OF ENGLAND
INDEPENDENT, THE MPC RAISED INTEREST RATES AND WE TIGHTENED
FISCAL POLICY BY 20 BILLION POUNDS LAST YEAR, AMOUNTING TO 3.5
PER CENT OF GDP FROM FINANCIAL YEAR 1996-97 TO FINANCIAL YEAR
1999-2000.

THERE MUST BE NO RETURN TO THE BOOM-BUST WE SAW IN THE LATE
1980S AND EARLY 90S, WHEN INTEREST RATES REACHED 15 PER CENT,
1 MILLION MANUFACTURING JOBS WERE LOST, NEARLY 170,000
BUSINESSES WENT UNDER AND THOUSANDS WHO FACED MORTGAGE MISERY
AND NEGATIVE EQUITY ARE EVEN NOW NOT YET RECOVERED FROM IT.

WE ARE COMMITTED TO STEERING A PATH OF STABILITY BASED ON A
STABLE MONETARY FRAMEWORK AND SOUND PUBLIC FINANCES.

AND IT IS BECAUSE OF THE REDUCTION IN BORROWING AND TOUGH
ACTION ON INFLATION, WHICH HAS TODAY SEEN US MEET OUR
INFLATION TARGET FOR THE SECOND MONTH IN SUCCESSION, THAT
BRITAIN IS NOW BETTER PLACED TO STEER A PATH OF STABILITY IN
THESE TROUBLED TIMES FOR THE GLOBAL ECONOMY.

WE HAVE CONSISTENTLY TAKEN A PRUDENT AND CAUTIOUS APPROACH TO
MANAGING THE PUBLIC FINANCES AND WE WILL CONTINUE TO DO SO. 
OUR PROJECTIONS HAVE BEEN BASED ON CAUTIOUS ASSUMPTIONS WHICH
HAVE BEEN AUDITED BY THE INDEPENDENT NATIONAL AUDIT OFFICE AND
OUR PLANS HAVE BUILT IN MARGINS TO COVER UNCERTAINTIES,
INCLUDING THE RISK OF SLOWER GROWTH.  WE HAVE WORKED WITHIN
THE PREVIOUS GOVERNMENT'S SPENDING PLANS FOR THE FIRST TWO
YEARS AND OUR CAREFUL PLANS MEAN THAT CURRENT SPENDING IS NOW
SET TO GROW IN REAL TERMS BY LESS OVER THIS PARLIAMENT THAN
THE LAST.


AS I HAVE SAID, SLOWER WORLD GROWTH MAKES IT INEVITABLE THAT
GROWTH IN BRITAIN NEXT YEAR WILL BE MORE MODERATE THAN
PREVIOUSLY EXPECTED.

BUT BECAUSE OF THE PRUDENT APPROACH WE HAVE FOLLOWED, EVEN
WITH MORE MODERATE GROWTH NEXT YEAR WE REMAIN ON TRACK TO MEET
OUR STRICT FISCAL RULES OVER THE ECONOMIC CYCLE WHILE
MAINTAINING OUR COMMITMENT TO AN ADDITIONAL 40 BILLION POUNDSFOR
IMPROVEMENTS IN HEALTH AND EDUCATION."