Economy: Monetary and Fiscal Policy

Lord Kinnock Excerpts

Tuesday 8th November 2011 Lords Chamber

[Lord Sassoon]

My Lords, I certainly agree that different countries should be taking different tracks, depending on their particular deficit and debt positions. I can only quote the concluding statement of the IMF, in its recent assessment, that:

“The current policy mix of tight fiscal and loose monetary policy remains appropriate”.

[Lord Kinnock]

My Lords, the Bank of England is patently seeking to foster growth with its very low interest rates and record QE, but the Government are actually depressing growth to virtually zero with their policy of public expenditure cuts that are too far and too fast. Is it not patently obvious that there is absolutely no co-ordination in the national interest at all?

[Lord Sassoon]

My Lords, I know that it is not for me to ask the questions this afternoon, but I wonder how much more expenditure and deficit the noble Lord, Lord Kinnock, would advocate before we risk getting into interest rates that are at the level of France, let alone of Italy. Last night the UK had 2.3 per cent 10-year interest rates, and Italy had 6.6 per cent heading for 6.7 per cent. Which would the noble Lords opposite like? We will stick to our deficit reduction plan, because that is what keeps interest rates low, and that is what our households and our businesses need.