Living Standards

Debate between Iain Duncan Smith and Stella Creasy

Wednesday 30th November 2011 Commons Chamber

[Mr Duncan Smith]

I am grateful for the intervention, as it allows me to remind the hon. Lady that in looking back at the period in the run-up to and start of the recession the OBR said the depth of boom and bust was greater than was anticipated—by more than 1%. The baseline from which we started, therefore, was much lower, which means, as is seen by the Treasury, that the amount we would have had to borrow would have been more than £100 billion if we had not taken our decisions early on. Labour Members’ posturing about their own position is fundamentally incorrect, and they must recognise that.

The OBR said that the eurozone crisis is

“likely to have contributed to weaker UK growth and business and consumer confidence.”

I know that Labour Members do not like to hear that that is an issue, but it is seen by everybody, not least of which the OBR.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

We all welcomed the establishment of the OBR because of the independence it gives. The full quotation from the OBR states that

“an external inflation shock constraining real household consumption”

is the reason for the revision in growth forecasts. How does the Secretary of State think that bearing down further on family incomes will help our economy to grow again?

[Mr Duncan Smith]

The reality, as the OBR and the Institute for Fiscal Studies make very clear, is that you cannot borrow your way out of a debt crisis. I know that Opposition Members are indulging in voodoo economics—a fake religion—but almost every economist abroad and at home says that you cannot borrow your way out of a debt crisis.