Skip to main content

Economic Growth

Volume 502: debated on Tuesday 15 December 2009

15. What estimate he has made of the current and future level of growth in the UK economy compared to other G20 countries; and if he will make a statement. (306857)

The pre-Budget report forecast that UK gross domestic product will have fallen by 4.75 per cent. in 2009 and will recover to 1 to 1.5 per cent. growth in 2010. The report did not forecast what will happen in other G20 economies, but world GDP is expected to contract by 1 per cent. this year, then to grow by 3.25 per cent. in 2010.

I am grateful to the Minister for those numbers. Given that we are the only G20 country still in recession, he will have to forgive us for not taking his forecast for granted. However, given that over the next couple of years, between pre-crash and post-crash levels, the level of debt in this country will have doubled—in fact, the rise in the debt will be third only to Iceland and Ireland—is the Minister not concerned that our growth levels will be much lower as a result? That will be a dangerous situation for everyone who lives in this country.

Let me first of all reassure the hon. Gentleman about our forecast. We said at the time of the Budget that we forecast 1 to 1.5 per cent. growth in 2010. At that time, most people, including the Opposition, said that that was much too optimistic. Today, however, the consensus has caught up with the forecast that we set out. I hope that the hon. Gentleman will be reassured by that vindication of my right hon. Friend the Chancellor’s forecast.

Right across the world, countries are borrowing more, which is the right thing to do. The stimulus that we provided has reduced uncertainty and helped to prevent a spiral of falling confidence and demand. That is why the impact of this unprecedented global shock has been so much less in the UK than many expected. If we had taken the advice of the Conservatives and let the recession take its toll, the damage and the long-term cost to the economy would have been far greater.

I am sure my right hon. Friend is aware that in certain sectors, there is potential for growth, and those are the ones that the Government need to invest in. I am thinking particularly of so-called green jobs. Intelligent Energy in my constituency is growing as a consequence of not only Government investment but investment from the private sector. That will deliver on jobs, but also from an environmental point of view in, for example, hydrogen fuel cells. Will he ensure that all Government aid is targeted at those future job growth areas, where we will make a significant impact on UK plc?

My hon. Friend is right, and I very much enjoyed my visit to Intelligent Energy as his guest a few years ago. Our “New industry, new jobs” strategy is targeting those parts of the economy with the biggest growth potential—for example, green jobs and the digital sector—and ensuring that we have the wherewithal to do well in the future in those sectors.