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Government Finance

Volume 485: debated on Thursday 18 December 2008

We have received representations covering a wide range of issues, including discussions with a series of national and international institutions which support the case for higher borrowing to support the economy.

Does the Chief Secretary accept a representation from me that, by the Treasury’s own figures, the national debt is set to double by 2012, to £1 trillion? Will she confirm that, for next year, Government borrowing as a proportion of our national income will be higher than when Denis Healey went to the International Monetary Fund?

I should perhaps point out to the hon. Gentleman that borrowing as a proportion of gross domestic product will be not dissimilar to the level that it reached in the early 1990s, when, in fact, the Conservative party doubled the national debt in the space of just five years in response to a home-grown recession, when it did not have an international, world financial crisis to deal with on a scale that we have not seen for many generations. We think that the right thing to do is to increase borrowing right now to support the economy, so that we can come through this faster and stronger.

The German Finance Minister, in talking about the borrowing that the Government are proposing, described the result as a complete failure of Labour policy. Will the Chief Secretary perhaps explain in what way that was an internal political comment in the German context?

As my right hon. Friend the Chancellor has already explained, the Germans have in fact increased their support for the economy with a fiscal stimulus earlier this year. We think that they were right to do that, and we will judge them on what they do, rather than on what they say. It is rather amusing that Conservative Members are now taking to quoting Europeans whom they would never have quoted before in support of their economic strategy, and they continue to be isolated—not just in Europe, but right across the world—in their opposition to action to help people through this and to support the economy right now.