World Economic Outlook: UK Growth and Inflation

Lord Macpherson of Earl's Court Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Lord Livermore (Lab)]

My noble friend is absolutely right. The economy, at the time of the spring forecast, showed that we are well placed going into this conflict. Inflation was at 3% and is set to fall to target—a much lower starting point than when Russia illegally invaded Ukraine. Borrowing was set to fall more over this Parliament than in any other G7 economy. We had increased headroom for over £23 billion, giving us the buffer to respond to these shocks, and GDP per capita was forecast to rise. Therefore, my noble friend is absolutely right. Outturn data for February, the final month before this conflict began, showed that the economy grew faster than anyone was expecting.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, I encourage the Financial Secretary not to become mesmerised by IMF forecasts. The British economy has proved remarkably resilient over the past 18 years in the face of a succession of shocks. Generally, the Government have got into difficulty when the Treasury and the Bank have done too much rather than too little. Can he confirm that any interventions will be targeted and that the Government will maintain their inflation target and stick to their fiscal rules?

[Lord Livermore (Lab)]

I absolutely confirm to the noble Lord all three of those points. As he knows, the price cap is giving households certainty on their bills until July, ahead of the winter months. As we respond to this crisis, we must absolutely learn from the mistakes of the past, some of which he mentioned. The previous Government pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss, and they gave the most support to the wealthiest households. We will not repeat the mistakes of the previous Government. We are planning for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our fiscal rules, as the noble Lord said, to keep inflation and interest rates as low as possible.