Oral Answers to Questions

David Amess Excerpts

Tuesday 21st June 2011 Commons Chamber

[Mr Osborne]

When the director of the IFS was asked this month:

“Have things changed so much in the past 12 months that you would expect the Government to change course now?”

he replied, “No”. In fact, the advice of the IMF is also that now would be the wrong time to adjust macro-economic policies, while the Governor of the Bank of England at Mansion house said that we should not adjust the macro-economic mix. The truth is that the Labour Opposition, who got us into this mess, have absolutely no answers for getting us out of it. Is it not striking that the shadow Chancellor gave a speech last week with his big new economic policy, and not a single Labour MP has mentioned it yet?

[Mr David Amess (Southend West) (Con)]

3. What recent representations he has received from the IMF on UK economic policy.

[The Chancellor of the Exchequer (Mr George Osborne)]

The IMF completed its article IV assessment of the UK economy this month. Its recommendation could not have been clearer. When asked whether it was time to adjust macro-economic policies, its answer was no.

[Mr Amess]

I am delighted that the IMF has confirmed that the Chancellor is pursuing the right strategy to clear up the mess left by the last rotten Labour Government. Will he explain why the yield on UK Government bonds is only 0.25% higher than in Germany, whereas in Portugal it is 8.5% higher?

[Mr Osborne]

The simple reason is that we have a credible deficit reduction plan. Even though we inherited a deficit higher than Portugal’s, our interest rates are closer to those of Germany. Indeed, the spread over Bunds—the difference between German and UK interest rates—has come down substantially over the last year, even though that gap has gone up in France, Spain and other European countries. The real monetary stimulus being provided to the economy by those low interest rates is anchored in the credible deficit reduction plan.