Economy: Effect of US “Fiscal Cliff” Solution Debate
Full Debate: Read Full DebateLord Peston
Main Page: Lord Peston (Labour - Life peer)Department Debates - View all Lord Peston's debates with the HM Treasury
(11 years, 11 months ago)
Lords ChamberMy Lords, the noble Lord will recall that in the Pre-Budget Statement my right honourable friend the Chancellor announced another £5.5 billion of additional capital spending on roads, science infrastructure and schools, and that earlier in the autumn we passed an Act providing guarantees for £40 billion for infrastructure and another £10 billion for housing. The Government are making considerable efforts to increase the amount of infrastructure activity.
My Lords, as a life-long opponent of the death penalty, I might make an exception for whoever—I hope it was not an economist—invented the expression “fiscal cliff”. Do the Government accept the analysis that if the US goes more deeply into recession it will have devastating adverse effects on the whole of the European economy and no policy envisaged by this Government would be any use whatever?
I think the noble Lord slightly overstates it. The fiscal cliff—elegant or inelegant—has been avoided and the expectations and the forecast for the US are that it will see relatively modest, but substantive, growth in 2013. As the noble Lord will know, the latest employment figures in the US suggest that there has been a significant addition to the number of people employed. Therefore, the chances of the kind of meltdown in the US economy that he is worried about look extraordinarily remote.