Chancellor claims credit for economic cheer

Kenneth Clarke claimed the credit for Christmas good cheer on the economy, with new figures yesterday showing the fastest growth in living standards since 1989 and a healthy balance of payments.

"The British economy will enter the new year in the best shape for a generation. I will stick to policies that will enable us to keep it up," the Chancellor said.

The Prime Minister, John Major, made plain the Government's hopes that the economy will give it an electoral boost. "Britain's success is too valuable, too important to all of us to be put at risk," he said in a speech last night.

The stock market celebrated the latest good news, following a record drop in unemployment and a glowing report from the OECD earlier this week, by setting a record yesterday.

The FTSE 100 index climbed 26 points to a closing record 4,077.6, after bobbing above 4,100 in afternoon trading.

It was partly boosted by gains on Wall Street. The Dow Jones index was 24 points higher at 6,497.86 by late morning. This followed a 127-point rise on Thursday, the biggest one-day jump in US share prices since 1987.

However, UK consumer confidence has fallen this month from November's record level, despite the recent run of good news on the economic front. People have become gloomier about both the general economic situation and their personal finances according to a survey carried out for the European Commission. It also showed that expectations of future inflation have increased. The increase in GDP in the third quarter was smaller than previously estimated, official statisticians said yesterday, but this was due to upward revisions to the level of output in the second quarter. GDP grew 0.7 per cent during the third quarter, or 2.4 per cent year-on- year. Growth in the second quarter was revised up to 0.6 per cent, or 2.3 per cent year-on-year.

Investment spending fell during the quarter, dominated by a 7.3 per cent drop in capital expenditure by the privatised electricity, gas and water companies to the lowest level so far this decade.

Consumer spending made the main contribution to growth, driven by big increases in disposable incomes adjusted for inflation. Thanks to earnings growth and tax cuts, the annual rate of increase in real incomes rose to 4.6 per cent during the July-September quarter, the fastest since early 1989.

Separate figures showed that the balance of payments worsened slightly during the third quarter, showing a tiny deficit of pounds 71m compared with a small surplus of pounds 344m the previous quarter. The dip was due to reduced income from investment.

The balance on "invisible" earnings - services, investment income and transfers - nearly offset the trade deficit, and is likely to set a record.

The invisibles surplus of pounds 8.9bn for the first nine months of 1996 has already beaten last year's record.

Profits sent abroad by companies which have invested in the UK reached a record pounds 3.6bn in the third quarter, but remained only half the near- record pounds 7.1bn earned on UK investment overseas.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'