Global Economy

Lord Taylor of Goss Moor Excerpts

Thursday 11th August 2011 Lords Chamber

[Lord Knight of Weymouth]

My Lords, the Chancellor’s Statement sustained the spin around the safe haven notion. I wondered whether the Minister has seen the comments of Jonathan Portes, the director of the National Institute of Economic and Social Research. Last week, he said that if you thought that what was driving low gilt yields was us being perceived as a safe haven, you would see a significant rise in the pound and we just have not seen that. He added:

“The reason people are marking down gilt yields is because the economy is weak”.

Is not the problem, as my noble friend Lord Eatwell has said, a lack of growth? Is it not true that, as a result of the decisions that this Government have made, we will see an additional £46 billion-worth of borrowing than was predicted a few months ago, and is it not important that the Government decided to slow down the rate of deficit reduction so that there is room, for example, to spend money on sustaining police numbers and keeping prisons open so that we can deal with the public disorder which we have been debating today?

[Lord Taylor of Goss Moor]

My Lords, is it not the case that when we hear the Governor of the Bank of England talk about head winds, we need to understand that, although the central projection may still be for growth, there are real risks to that growth? In those circumstances, surely it is possible for the Government to be clear that they will stick by the deficit reduction programme as the target, and that, like any good pilot faced with stormy weather, they will adjust course as necessary? I do not believe that the Opposition are right to say that that needs to be done in some emergency way at the present time, but it is sensible to flag up that that may be necessary if the projections are not met. In those terms, will the Minister endorse the comments by the Deputy Prime Minister that seemed to indicate that the Government would work to stimulate the economy, as and when that proves necessary?

[Lord Radice]

Has the Minister noted a certain irony in the Chancellor’s Statement in that the United Kingdom, which is not a member of the eurozone, is advising the eurozone how to conduct its affairs? Indeed, it is going so far as to suggest that the eurozone institutions are strengthened and that there should be further integration. I happen to agree with the Chancellor, and with my right honourable friend, but I think the Chancellor has a nerve.