Economy: Fiscal Framework

Lord Peston Excerpts

Tuesday 4th June 2013 Lords Chamber

[Lord Newby]

My Lords, as the noble Lord said, we have a floating exchange rate. The Government do not set a target for the exchange rate; it responds to economic circumstances, including the decisions taken by the independent Bank of England.

[Lord Peston]

My Lords, given the economic mess that the Government’s policies have got the whole country into…

[Noble Lords]

Oh!

[Lord Peston]

Oh yes. I hope I do not have to remind the coalition how long it has been in power and it is about time it accepted some degree of responsibility. Some flexibility in the fiscal framework is called for, and the obvious flexibility is to extend the planning horizon—I advise the Government on this with no charge—to the whole length of the business cycle so that we could have some expansionary fiscal policies now, followed, in due course, by further fiscal adjustment. That is the way we ought to be going, and the sooner we have a Government that does it, the better.

[Lord Newby]

My Lords, the Government have pushed back the period during which we are going to eliminate the deficit. The rate at which we are doing it, at about 1% of GDP per annum, is exactly in line with IMF guidance to countries that find themselves in the position that we do.