Gilt Yields

Lord Clarke of Nottingham Excerpts

Tuesday 2nd September 2025 Lords Chamber

[Lord Livermore (Lab)]

I am not sure I entirely follow my noble friend’s question. What I will say is that current global market volatility underlines the centrality of our fiscal rules. We have fiscal rules specifically to give markets confidence that we have a clear path to get borrowing down, and there should be no doubt about the Government’s commitment to economic stability and sound public finances, which is why meeting the fiscal rules is non-negotiable.

[Lord Clarke of Nottingham (Con)]

My Lords, the recent rise in yields on bonds should serve as a warning that this country is much nearer to the risk of a financial crisis than the Government are even remotely acknowledging. It is not impossible to foresee a trip to the IMF eventually unless the Government can get their fiscal policy under control. They now have a very tough and difficult Budget to introduce, in which they will probably have to take some very unpopular decisions in the short term. Will the Minister assure us that the Government will stop floating various ideas to try them out in the newspapers, will look to raise revenue from the principal taxes that are usually used in these circumstances, which they foolishly ruled out as part of their election manifesto, and will curb and if possible reduce the level of borrowing they are making, and not simply define all borrowing as “investment” to say that it does not damage their fiscal policy? Only that kind of responsible action in the genuine medium and long-term national interest will stop the markets being as nervous as they have been.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. There was a lot there; let me see if I can cover some of that. He is absolutely right to draw attention to the fact that, as the previous Government found, credibility is hard won but easily lost. That is why ongoing market volatility further underlines the importance of a robust fiscal framework and non-negotiable fiscal rules. I assure him that we will continue to meet our fiscal rules. He talks about reducing borrowing, and we have set out a very clear path to reduce borrowing across this Parliament.

The noble Lord has told me many times that we should raise taxes on working people. We have clearly said that that is not our intention, and we have a manifesto commitment to that effect. I will not give a running commentary now on the fiscal forecast or speculate on the next Budget. As he draws attention to, there has been much speculation in the newspapers, as is usual ahead of a Budget. A lot of that speculation is irresponsible, but I will not comment on individual tax measures now. We will do things in the usual way: the Chancellor will ask the OBR to produce a new forecast in the autumn, she will take decisions based on that forecast and we will set out our fiscal plans at the Budget in the usual way. The Chancellor will do so mindful of the importance of growth and investment to businesses and the economy.