The Economy

Part of Opposition Day — [18th Allotted Day] – in the House of Commons at 1:49 pm on 22nd June 2011.

Alert me about debates like this

Photo of George Osborne George Osborne The Chancellor of the Exchequer 1:49 pm, 22nd June 2011

I have taken several interventions, and I will take some more after I have made a little progress.

The Government have put in place three measures: first, a credible plan to deal with the deficit; secondly, a plan for growth that supports the private sector and rebalances our economy; and thirdly—astonishingly, the shadow Chancellor did not mention this—a plan for the banking sector, to ensure that we deal with the problems we currently face while also preventing a repeat of the banking crisis in future.

Let me address each of those in turn. In terms of the budget deficit, our understanding is based on the following points. Britain has a large structural deficit; it emerged before the recession began; it will not go away automatically as the economy recovers; and it puts our whole economy at risk. We only have to look at what is happening in other parts of Europe to see that that is the case. Almost all the independent observers of the British economy agree with those points, including the crucial fact that we had a structural deficit before the crisis struck. The OECD and the International Monetary Fund estimate that before the crisis Britain had the largest structural deficit of all the G7 countries.

Tony Blair states in his memoirs that

“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”

[Interruption.] The shadow Chancellor says, “Rubbish.” I thought that he conducted his politics on the record, and I am not sure that Tony Blair would have agreed with that; the last time he checked, he was the Prime Minister and First Lord of the Treasury in 2005.

My predecessor as Chancellor, the right hon. Member for Edinburgh South West, says that by 2007

“we had reached the limits of what I thought we should be spending.”

What is the shadow Chancellor’s view? It is this:

“I don’t think we had a structural deficit at all”.

No one agrees with him on that; he is in complete denial.