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At the moment we are in the phase of the business cycle which brings lower growth. We are currently experiencing a slow-down in domestic consumption after several years of remarkable buoyancy. A period of consolidation of the stock and property markets began somewhat earlier and has also affected local sentiment and consumption and, of course, reduced the "feel good" factor.
However, let us place all this in context. We continue to perform well on the external trade front. In the first nine months of this year, domestic exports, re-exports and exports of services all grew in real terms, with the last two in particular registering double digit increases over the same period in 1994.
The growth in investment activity has also been impressive over this period. Investor confidence has remained solid. Retained imports of capital goods were up by 28% in the major sectors for the first nine months of this year.
With significant injections of public and private funds taking place in such infrastructure projects as the Airport Core Programme over the next few years, and potential projects, such as the Railway Development Strategy, on the drawing board, a high level of investment looks set to continue well into the next century.
Short-Term Economic Stimulus
These facts scarcely point to a recession. But I must repeat we are not complacent about our economic performance, and I am grateful for Members' suggestions about ways to overcome our current problems and improve our future performance. But there are limits to what can be done. Before we embark on new policies, we must be certain that the proposals for change are necessary, and not just short-term gestures which could do lasting harm; they must be effective, and not just a matter of throwing taxpayers' money at problems; and they must be within the Government's proper responsibility and not just an excuse for clumsy intervention in the economy.
I will have more to say on this and on our longer-term economic strategy during the Motion Debate on the economy next week. But, in general, I would ask Members to bear in mind the experience of advanced economies elsewhere that short-term measures designed to "kick-start" the economy can be costly, are often of doubtful usefulness and can have harmful consequences over the long term.