Achieving Economic Growth

Debate between Rachel Reeves and Matt Western

Wednesday 18th May 2022 Commons Chamber

[Rachel Reeves]

The Bank of England has issued a stark warning of a downturn next year, with GDP projected to fall, and it is not set to get much better after that. [Interruption.] The Chief Secretary says, from a sedentary position, that it is set to get better. Oh, yes—growth in the following year is expected to be 0.25%, almost 10 times lower than what the Office for Budget Responsibility predicted in March. Well, done, Tory Government!

We have heard nothing from this Conservative Government about what they will do to change the situation, and if the Chief Secretary is proud of that record, good luck to him. The Government have no plan to provide the catalytic investment that we need to create new markets, no plan to get trade moving again and tackle the supply chain problems facing businesses, and no plan for a new industrial strategy to make the most of Britain’s potential, bringing good jobs to all parts of Britain. The Conservatives have become the low-growth party, and our country is paying the price.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend is making some powerful points about the fall in growth. I am sure she will be as concerned as I am about the statistics which show the decline in business investment, which I think is down by 9%. We are seeing a 34% fall in automotive production, which is a massive hit for the UK economy. The impact on our foreign competitors is less, because those countries have a strategy. Does my hon. Friend agree that this Government seem not to have an industrial strategy—for gaming semiconductor production, for example? Does she agree that that is what is needed, and that is what a Labour Government would do?

[Rachel Reeves]

The figures from the International Monetary Fund show that investment as a proportion of our economy in the UK is 18%, if we take both public and private investment into account. In other similar economies that the IMF looks at, it is 23%. If we add that up over the next six years—the IMF’s forecast horizon—we see a projection of £1 trillion less investment in the UK than in other countries. These are huge missed opportunities to create the jobs and industries of the future that my hon. Friend wants to see in Warwick and Leamington and all of us want to see in our constituencies.

The Government’s lack of action is felt by businesses. In April, the price of materials for UK manufacturers increased at its fastest rate since records began, with prices up by nearly a fifth on the previous year. When I speak to businesses, they are worried about falling consumer confidence and a lack of spending power, as well as the costs that they are having to face.