Lord Bilimoria
Main Page: Lord Bilimoria (Crossbench - Life peer)Department Debates - View all Lord Bilimoria's debates with the HM Treasury
(9 years, 7 months ago)
Lords ChamberMy Lords, any commitment by the Labour Party would have a lot more credibility if we had even the vaguest clue as to how it was going to get the deficit down.
Would the Minister agree that one reason for the credit crunch and the financial crisis seven years ago was the prolonged low rate of interest of 5% a year? Now that the Government have extortionate debt servicing costs at a 0.5% base rate, what plans do they have when interest rates go up, as they will? How will they service those costs, and at what rate are they borrowing for long-term debt at the moment?
My Lords, one of the main reasons why we need to get debt under control is that the long-term borrowing costs are very significant. Whatever the interest rate, even with current low rates of interest, we are spending 2.5% of GDP per annum on servicing it, significantly more than we spend on the aid budget. Because interest rates are low and because we have a very credible economic policy, we have been able to borrow long term at low interest rates—but none the less we need to get the debt down because we want to get the borrowing costs down.