UK Budget Deficit

Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 15th December 2009.

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Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions) 2:30 pm, 15th December 2009

What recent assessment he has made of the relative effect of the UK budget deficit on the economy in comparison with other G20 economies.

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Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

Does not the fact that Britain's deficit is larger than that of Greece, which has had its credit rating downgraded, mean that we urgently need to get our finances in order and keep interest rates low so that we can get Britain growing again?

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Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

We have seen an unprecedented global downturn, and the debt is going up in all the G7 countries as well as other countries. Of course UK debt was low at the beginning, giving us extra fiscal space, as the International Monetary Fund has pointed out. The additional support that we have provided has meant fewer jobs lost, fewer business failures, fewer homes repossessed and less damage to the economy. As my right hon. Friend the Chancellor has explained, we will now halve the deficit over the next four years and so secure the public finances.

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Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North

Is not the most important thing the fact that we have a deficit reduction plan, so that we can keep money in the economy, get through the recession and keep up front-line spending, particularly on health services? In Stoke-on-Trent we need the Haywood hospital and we need our schools, and we do not need the deficit.

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Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

My hon. Friend is absolutely right. It is vital that we have a plan-as we do-and that we can show how we will continue to live within our means while also providing the investment that her constituency and the public services need. We must also continue to support the economy, given the uncertainty that is still around. The Opposition made the wrong call on the banking crisis and the wrong call on the recession, and now they are making the wrong call on the recovery as well.

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