IMF Economic Outlook

Lindsay Hoyle Excerpts

Tuesday 31st January 2023 Commons Chamber

[James Cartlidge]

The right hon. Lady talks about 13 years of failure. Let me just repeat the facts of the matter. Since 2010, the UK has grown faster than France, Japan and Italy. She talks about the next two years. As I have said, the forecast from the IMF says:

“Cumulative growth over the 2022-24 period is predicted to be higher—

in the UK—

“than in Germany and Japan, and at a similar rate to the US.”

I am grateful to the shadow Chancellor for quoting the IMF, because I, too, wish to quote the IMF. Let us go to the IMF press conference at about 3am this morning, which, Mr Speaker, I am sure you were eagerly watching, and quote the economic counsellor Pierre-Olivier Gourinchas who said:

“Let’s start with the good news: the UK economy has actually done relatively well in the last year. We’ve revised”—

growth—

“upwards to 4.1%...that’s one of the highest growth rates in Europe, in that region, for that year”—

2022.

The shadow Chancellor did make a passing reference to the pandemic, but it is usually Labour’s habit to airbrush out of history completely the fact that we as a Government have overseen two of the greatest challenges in the country’s history: a pandemic followed by the invasion of Ukraine. [Interruption.] I know why the shadow Chancellor does not want to talk about the pandemic. Back in December 2021, when the Labour Welsh Administration wanted to lock down in the face of omicron, we took the brave decision as a Government not to lock down in England. Let us remember what the shadow Health and Social Care Secretary said at the time. He said that plan B was “insufficient” and that there were additional measures that were “necessary”. Labour would have kept us locked down for longer. We took the decision to keep our country open. We did so because of the vaccine that we brought forward, which is something that Labour would not have done.

The crucial issue, as I said, is bearing down on inflation, which will give us the best chance of restoring sustainable growth. A key facet of dealing with inflation is fiscal discipline. We have heard from the shadow Chancellor recently that Labour is suddenly the party of sound money. Since the speech—I think it was two weeks ago—in which the leader of the Labour party promised to put away the great big Government cheque book, Labour has made £45 billion of unfunded spending commitments. We all know where that ends. Labour starts writing blank cheques, and it ends with a letter from its Chief Secretary to the Treasury to the rest of the country saying, “There’s no money left.”

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the Minister take this opportunity to reflect on last year when, despite the headwinds of the coronavirus, the invasion of Ukraine, huge hikes in energy costs, rising interest rates and high inflation in this country, UK businesses managed to generate more than 4.1% of economic growth—twice that of the United States, 25% higher than China, and higher than the eurozone?

[James Cartlidge]

The Chair of the Select Committee is spot on. Instead of talking down our economy, she makes the key point that, despite all those challenges, we had strong growth last year because of British enterprise. That is why, on Friday, the Chancellor, himself a former entrepreneur—there are not many of those on the Opposition Benches—said that we will back advanced manufacturing in the high-growth sectors to ensure that we continue to live with that level of growth in the future.

[Mr Speaker]

I call the SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

I suppose that it is apposite that there is an urgent question on a potential recession on the third anniversary of Brexit.

The IMF has said that the economy of the UK—the only G7 country facing recession—would face a downgrade reflecting, it says, tighter fiscal and monetary policies and the still high energy retail prices weighing on household budgets. There is no getting away from it: with even sanctioned Russia forecast to grow, that is a gloomy prognosis. Given that the Government expect to meet their own new fiscal rule on public sector net debt by a paltry £9 billion in 2027-28, according to the Office for Budget Responsibility, the Government’s own strictures mean that there is no fiscal headroom to provide more support. Is this not the time, therefore, to reduce the energy companies’ investment allowance, which allows them to reduce the tax that they pay by 91p in the pound, to start to generate a meaningful windfall tax that is required to further support households and small and medium-sized enterprises—two of the main drivers of the IMF forecast for the economy—which will otherwise see their energy costs rocket this year?

--- Later in debate ---

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is it not time that the Minister told the truth to my constituents? The truth is that the Government have hollowed out not only our defence capacity but our economy. Will he explain to my constituents why, on the ship of shame that is the Government Benches, where there is no captain, first mate or crew, the captain’s cabin boy has been sent to answer questions on this, the most vital topic at the moment?

[Mr Speaker]

Order. The hon. Gentleman is an elder statesman of this House. I am sure he can be pleasant if he really tries. I do not think that kind of question does this Chamber any good.

[James Cartlidge]

The hon. Gentleman mentions defence, but he might want to explain to his constituents why, at the last general election, he backed the right hon. Member for Islington North (Jeremy Corbyn), whose policy would have had us leave NATO and undermine the nuclear deterrent.

We have stood by the people of Ukraine in the face of a real war. We have not deployed into the theatre, but we have done everything possible short of that, including training the Ukrainian army since 2015. So yes, I will tell the hon. Gentleman’s constituents the truth: they should be proud of what this country is doing for the people of Ukraine.

--- Later in debate ---

[James Cartlidge]

The hon. Lady makes a very good substantive economic point, which is that when inflationary pressures are higher, as they are at the moment, it is discretionary consumption that comes under pressure—and that means, for example, demand in pubs and shops and so on. I can confirm that we have taken huge steps to support hospitality, as we did in the pandemic. We recently announced that the 50% reduction in business rates would be extended by another year and go up to 75%. I announced in December a six-month extension to the freeze in alcohol duty, but hospitality is an important sector that is creating jobs, and we want to see what more we can do to support it.

[Mr Speaker]

To complete the urgent question, I call Jim Shannon.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his answers to the urgent question. Being the only G7 country, according to the forecast, to have an economy set to shrink this year, will the Minister consider increasing spending power in the United Kingdom by focusing on help for SMEs, which are the backbone of our economy and the job creators, and in particular businesses in Northern Ireland, which are hit harder by the costs associated with the reprehensible Northern Ireland protocol?