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I will come to that point. There certainly is a challenging market environment for private finance initiative deals at present, but a number of them have been agreed recently; I am thinking of the Forest Gate housing project in my own area, for example—which was, I think, agreed last week—and Building Schools for the Future projects, and not only of the project to which the hon. Gentleman referred.
We have been able to put right a lot of the damage caused by previous years of chronic under-investment. Today, we are in a recession—the first to hit the UK since the early 1990s and face some of the harshest economic conditions for decades, and perhaps for a century. The nature of this downturn is fundamentally different from those the UK suffered in the past. In the late 1980s, UK GDP growth was allowed to rise to 6 per cent., well above the economy's growth potential. As a result inflation rose to double digits and interest rates followed in an effort to control inflation. Domestic policy mistakes caused the economy to enter recession in 1990 and unemployment to rise above 3 million for the second time in 10 years.
Today, things are very different. The problem we face is global, with many forecasters now expecting the world economy to contract for the first time since the second world war. Bad decisions at the heart of the international financial system have meant banks losing confidence in each other and, therefore, global credit markets to freeze up.
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