Terrorist Attacks: Effect on UK Economy

– in the House of Lords at 3:00 pm on 23 October 2001.

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Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Liberal Democrat 3:00, 23 October 2001

asked Her Majesty's Government:

How the terrorist attacks on New York and Washington on 11th September have changed their outlook for the United Kingdom economy; and what gross domestic product growth rates they now expect for 2001 and 2002.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, the Government's latest economic forecasts were published in Budget 2001. Updated forecasts for the UK and world economies will be presented as part of the forthcoming Pre-Budget Report.

Photo of Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay Liberal Democrat

My Lords, I thank the Minister for that reply as far as it goes. Does he accept that boom and bust have not been abolished, that economic growth is slowing down and that taxes and borrowing will clearly have to go up? The general election showed very strong support for fair tax rises to pay for improved public services. Will the noble Lord ask the Prime Minister to stop hinting and start fighting to mobilise that support, even with a fraction of the courage that he shows in fighting enemies abroad? If the Prime Minister wants a headline when he makes the official announcement of this new policy in the Sun, may I suggest that it should be "Health taxes, not stealth taxes"?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I do not know whether the noble Lord is inviting me to provide a running forecast that changes day by day, or week by week, of what our view of the economy should be. I believe that that would be very unwise. The fact is that Budget 2001 took a very realistic, and at times pessimistic, view of our economy and the world economy. We made the point that further risks to our economy and the world economy were all in the downward direction. Under those circumstances I shall not be tempted to make intervening forecasts, and I shall certainly not follow the noble Lord, Lord Oakeshott, in his policy speculations.

Photo of Lord Saatchi Lord Saatchi Conservative

My Lords, was not the point of the noble Lord, Lord Oakeshott, that, as we have seen in recent weeks, straightforwardness is a virtue and any appearance of manipulation is a vice? The Government have shown admirable straightforwardness in terms of war and diplomacy following the events of 11th September, but is it not right that when it comes to economics we have been treated to much the same spectacle as before; namely, contradictory briefings by Ministers, hints of one kind or another, as the noble Lord said, and briefings of selected journalists with contradictory views of what this might mean for taxes and spending? Would it not be better to apply the same straightforwardness to economics as the Government have admirably applied to war and diplomacy?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, this is a very powerful Government, but if they were capable of manipulating the world economy they really would have something on which to congratulate themselves.

Photo of Lord Ezra Lord Ezra Liberal Democrat

My Lords, is the noble Lord aware that we are continuing to run balance of payments deficits in trade and goods which every quarter are higher than the last? How long does the noble Lord consider that that will continue, and at what point will the Government feel that they should intervene?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, it is certainly true that the most recent figures for our deficit on current account are higher than those in previous quarters, but I must point out that in proportion to gross domestic product they are substantially lower than they were for considerable periods in the 1980s.

Photo of Lord Roberts of Conwy Lord Roberts of Conwy Conservative

My Lords, for the sake of clarification, can the noble Lord give us the anticipated GDP growth rates most recently available to him pre-11th September for 2001 and 2002?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, the most recent figures are those in Budget 2001, which anticipated growth in 2001 and in 2003 in the range of 2¼ to 2¾ per cent.