The Economy

Part of Council Tax Rebate – in the House of Commons at 5:25 pm on 31st March 2009.

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Photo of Ruth Kelly Ruth Kelly Labour, Bolton West 5:25 pm, 31st March 2009

It is always a pleasure to follow Dr. Cable. I always enjoy his arguments, about half of which I fully and strongly support, and half of which I disagree with vehemently. However, he makes his arguments with great authority and I am pleased that he has now converted his party to the idea of a fiscal stimulus. Not many weeks ago, he argued that any tax cuts, or indeed spending increases, should be fully funded. While he correctly says that the fiscal stimulus is only part of the solution, at least he now accepts that it is something on which the UK and other Governments ought to be engaged.

I congratulate my right hon. Friends the Chancellor and the Prime Minister on the strong and robust leadership that they are showing. They are leading the way, across the globe, with a concerted, robust response to what must certainly be the biggest financial crisis within living memory. It is accompanied by the first global economic slow-down since the second world war. Indeed, the Governor of the Bank of England said only last week:

"I cannot recall any previous experience of such a sudden, severe and synchronised downturn in world output of the kind that we have seen in the last three to four months."

Of course, most severe recessions are caused by mistakes made by policy makers, rather than by any global economic shock that has come along and hit the financial or economic system. We should never forget that it took the world years to recover from the 1929 Wall street crash. However, the problem was not a function of the crash itself, but of the response by global policy makers to that crash. It is timely to remember that the London summit in 1933 collapsed in disunity as the world retreated into a downward spiral of protectionism and depression.

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