Oral Answers to Questions

Debate between Baroness Stuart of Edgbaston and David Gauke

Tuesday 10th May 2011 Commons Chamber

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

4. What assessment he has made of the effects of the increase in the standard rate of VAT on levels of economic growth in the first quarter of 2011.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

At this stage, it is not possible to make a full assessment of the effect of the increase in the standard rate of VAT on levels of economic growth in the first quarter of 2011. The Office for Budget Responsibility forecast released on 23 March projected growth of 1.7% over the course of 2011. That forecast takes full account of the Government’s fiscal policy measures.

[Ms Stuart]

The Bank of England expects inflation rates to accelerate over the next few months. The markets, however, seem to have taken the view that interest rates will not increase as speedily as was anticipated just a few weeks ago. How does the Exchequer Secretary reconcile the Chancellor’s notion that the economy has grown with the judgment of the markets?

[Mr Gauke]

The economy is growing: that is clear from the Office for National Statistics numbers and from the projections of every respected economic forecaster. Despite the predictions coming from the Opposition last year, there has been no double dip.