Government: Economic Policies

Lord Forsyth of Drumlean Excerpts

Wednesday 30th January 2013 Lords Chamber

[Lord Deighton]

I agree with the implicit statement of the noble Lord that the economy is taking a long time to recover. That is because of the depth of the problems that we confront and the global nature of the economic recession with which we are dealing. There is only one effective solution to that, which is to restore market credibility. The only way in which we can do that is to ensure that our finances are absolutely stable. The alternative strategy of borrowing more to increase demand has already been proven, given the state that we got into, not to work. You do not borrow your way out of a recession which is caused by a deficit created by borrowing too much.

[Lord Forsyth of Drumlean]

Will my noble friend confirm that the reason the Government are facing such terrible economic difficulties is because at the height of the boom created by Gordon Brown, that Government continued to borrow? As a measure of their economic competence, they sold gold at the bottom of the market, which is affectionately known in the City as the “Brown bottom”.

[Lord Deighton]

I thank my noble friend for that excellent contribution. I will not comment on the timing of selling the gold. Hitting a market high is tough to do. I will refer to what I would call the “scissors of doom”, which is the graph I was first shown when I entered the Treasury, which shows that between 2008 and 2010 spending was heading north at a rapid rate while receipts were heading south at an equally rapid rate, a situation that we are now trying to recover through this period of fiscal consolidation.