Economy: Fiscal Framework

Lord Forsyth of Drumlean Excerpts

Tuesday 4th June 2013 Lords Chamber

[Lord Newby]

Clearly some do view it as that. It is worth bearing in mind that while we are reducing our deficit to the 3% EU Maastricht target over the period to 2017-18, even the relaxation that the EU has agreed in recent weeks with France, Slovenia, the Netherlands and Spain will get them back to a target of borrowing of less than 3% by 2015 or 2016. It is therefore taking us a lot longer. The Government have agreed to phase down borrowing over a much longer period than is allowed even under the reduced timetable elsewhere in the EU.

[Lord Forsyth of Drumlean]

My Lords, is my noble friend not concerned at the way in which asset prices, particularly housing and shares, are now being inflated as a result of quantitative easing? Will he confirm that this Government will never use inflation as a means to get rid of the debt, because that will result in substantial unemployment, a loss of competitiveness and the road to Carey Street?

[Lord Newby]

My Lords, this Government will make that commitment, which is why the target that we set for the Monetary Policy Committee of the Bank of England has not been relaxed, and will not be relaxed during this Government’s tenure of office.