Autumn Forecast

Lord Hamilton of Epsom Excerpts

Monday 29th November 2010 Lords Chamber

[Lord Sassoon]

My Lords, it is always good to have the noble Lord, Lord Myners, present. I do not suppose that his Government ever applied any spin to any numbers. He shakes his head. Oh, well. All our memories are failing. Seriously, the difference this time is that we have a much greater, more transparent analysis of the numbers—over 150 pages of numbers. I am grateful to him for welcoming the formation of the Office for Budget Responsibility, and I hope he will be with me, giving it a fair wind in Committee on the Bill shortly.

There is a serious point here. Not only are there 150 pages of analysis and a lot more detail than was ever given before, and not only has that been available a couple of hours before my right honourable friend’s Statement, but we will be able to pick over it in the next few weeks. The OBR itself will come to the Treasury Select Committee and answer questions there and all sorts of other questions in different fora.

As to his specific question on the output gap, yes the numbers show that it will be 0.9 per cent in 2015, down from 3.3 or 3.4 per cent as it is now and from 4.2 per cent as it got to in 2009. As to the levels of private sector debt, I do not accept the numbers given by the noble Lord, Lord Eatwell; I accept the numbers that are in the OBR’s document. There will be a total leverage in the economy that is very far down on the over-leverage with which the previous Government left us.

[Lord Hamilton of Epsom]

Does my noble friend the Minister accept that one of the critical things that it was important for the coalition Government to do was to reassure the financial markets that we had a handle on the whole question of the deficit which we had inherited? That is one of the reasons—my noble friend mentioned this—why interest rates have come down since the coalition Government took over and since the new Budget was announced, and one of the reasons why the interest burden is going to be much less over the coming years.

However, is it not rather depressing that the noble Lord, Lord Eatwell, still goes on about the possibility of a double-dip recession when it is quite clear from these forecasts that the chances of that are almost nil?

[Lord Sassoon]

I am very grateful to my noble friend. I absolutely share his view both on the depressing scenarios that the Opposition choose to paint and on the overall scenario for solid growth which the OBR confirms.

As to the judgment of the financial markets, I have looked at this morning’s numbers, and the UK spread over the German 10-year Bund has gone down from 96 basis points at the date of the general election to 60 basis points today, which is a very significant measure of confidence by the international markets in our consolidation plan.