TNAG-2912-FCO40-4187-International-support-from-Asia-regarding-the-future-of-Hong-1993 — Page 84

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Unemployment

The Prime Minister said that there were Over 20 million people in the G7 countries who were unemployed. Over the last 20 years there had been a steady rise in the underlying level of unemployment, as well as in the number of long-term unemployed, particularly among low-skilled males. This was potentially a huge social problem. Governments faced large and rising social costs. There was also a general mood of disillusionment with all the more politics and the political system which made it urgent to tackle this problem.

A further reduction in German interest rates was essential. Germany was for the first time facing serious economic German unemployment was rising rapidly. The UK

difficulties.

The

the only European country whose economy was growing. UK's growth rate would be 14 per cent this year and was likely to be 3 per cent next year. But UK exports would be seriously affected if our main European markets contracted.

had

become clear

The more we problem, the

The need to remove barriers to growth had across the world as the result of the recession. could highlight the international nature of the easier it would be for individual governments to take the necessary measures. Mr. Miyazawa asked what could be done jointly by the G7 to address this problem, other than reaching agreement on the Uruguay Round. The Prime Minister said that a whole series of supply-side changes were necessary, such as greater concentration on deregulation and on education and skills training. It was also important to reduce fiscal deficits and to restrain sucial costs. Many of these problems were common to all the G7 countries. If Heads of Government made a commitment to tackle them, the collective impact would be quite

considerable.

a

Mr. Miyazawa noted that President Clinton had proposed a meeting of Employment Ministers to tackle this problem. Prime Minister said that President Clinton had not consulted

The

others about this proposal. The UK had no objection to this idea; but it would have been more helpful if the proposal had come out of the Summit.

GATT

The Prime Minister stressed that a satisfactory agreement on GATT would make an important contribution to creating jobs. It had been agreed at successive Summits to work for an early GATT settlement. Did Mr. Miyazawa think agreement would be reached by the end of 1993? Mr. Miyazawa hoped that the Quad Talks would reach

reasonable market access package. One of the problems was US reluctance to reduce tariffs on textiles. The Prime Minister said that this was not so much but because the Administration was opposed to tariff reductions, because of problems in Congress.

agreement

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CONFIDENTIAL