Bank of England: Economic Forecast

Lord Lea of Crondall Excerpts

Wednesday 6th October 2010 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend for drawing our attention to the important words of Sir Terry Leahy, the chief executive of our largest retailer. It confirms the remarks of such bodies as the CBI, which now says that the prospect of the UK going back into recession is unlikely, and the ringing endorsement on 27 September of the IMF.

On the second part of my noble friend’s question, it is an absolute priority of the Government to do everything we can to promote trade with the Asian and other economies. I took advantage of the House not sitting in September to visit India and the Gulf to do precisely that. Many of my ministerial colleagues have been doing exactly the same thing.

[Lord Lea of Crondall]

Does the Minister agree that throwing several hundred thousand public servants on to the unemployment register will reduce income tax revenues? Does he also agree that this, in turn, will mean that the deficit reduction will not be as fast as is being forecast, and that the rate of economic growth is likely to be adjusted downwards, rather than upwards?

[Lord Sassoon]

I am not sure I agree with much of the noble Lord’s analysis of the situation, other than that a very necessary rebalancing of the economy has to take place. Within 50 days, my right honourable friend the Chancellor came forward with a radical, necessary and tough Budget. There will be painful adjustments as the private sector takes up the slack from the overbloated public sector. That is fully built into the Budget forecasts and the details of the spending cuts will be revealed on 20 October. The great range of forecasters, including the independent Office for Budget Responsibility, expect growth to continue quarter by quarter, with unemployment falling and employment going up.