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
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas