UK Economy

Debate between Stewart Hosie and Bim Afolami

Monday 19th February 2024 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

The Minister spoke about resilience, but the fourth quarter contraction in the economy was the biggest quarterly fall since early 2021 at the height of the covid pandemic, so I am not sure he is quite right about resilience. He also spoke about growth, but the Government told us in November that growth is not forecast to exceed 2% in any year in the forecast period. How modest the Minister’s ambitions are.

National debt is still approaching 100% of GDP—£3 trillion. The consequences of Brexit are suppressing growth, and that poses a challenge to the UK Government’s fiscal targets. Although it is welcome that inflation has fallen, prices remain high. Prices are not falling; they are simply going up slightly less steeply than they were a month or two ago. It is obvious that what the economy needs is growth, and the investment to generate that growth, but given that business investment, according to the Government, is forecast down this year by 5.6%, private dwelling investment is forecast down this year by 6%, and flat at 0% next year, and general Government investment is forecast down in ’25, ’26, ’27 and ’28, where will the investment for growth come from?

[Bim Afolami]

I deeply respect the right hon. Gentleman, and I will take his points one by one. On resilience, the way we get resilience for ordinary people and for households is to ensure that real household incomes increase. Since 2010, they are up 12%. We are trying to increase business resilience with our full expensing regime, which is revolutionary in the advanced world. Full expensing will enable more businesses to invest and will deal with the chronic weakness of the British economy, which is weak investment. That is why we are doing that.

The right hon. Gentleman mentioned growth. Growth is not as high as we would like, and that is the case across the whole of Europe and the whole of the industrialised world. That is why the Chancellor in the last fiscal event put in place 110 growth measures. We have a plan for growth over the long term, and we will deliver it. The right hon. Gentleman mentioned debt. To repeat the point I made to the shadow Chancellor, debt is falling in the fifth year of the forecast according to our fiscal rule, which excludes the Bank of England. That is not just the fiscal rule now; it has always been the fiscal rule.

The right hon. Gentleman makes the fair point that lower inflation does not mean that prices are falling. Indeed, lower inflation is a lower rate of increase. We all know that in this House. That is why bringing down inflation is so important, and the Opposition, with their plan to recklessly jack up borrowing and taxes to the extent of £28 billion, will increase inflation.

I repeat that investment has been a long-term weakness of the British economy. We are taking long-term measures to deal with it, and I hope that in the next fiscal event—the Budget—we will continue in that vein.