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Budget Deficits

Volume 527: debated on Tuesday 10 May 2011

14. What recent discussions he has had with his international counterparts on strategies to reduce budget deficits. (54735)

At the G20 summit in Seoul in November, advanced countries committed to formulate and implement credible growth-friendly, medium-term fiscal consolidation plans. The Chancellor has been involved in discussions with our international and European counterparts since the Seoul summit, including in the International Monetary and Financial Committee and the International Monetary Fund spring meetings. As was the case with the previous Administration, it is not the Government’s practice to provide details of all such discussions.

I thank the Minister for his reply. The OECD’s recent report says that the UK is striking

“the right balance between addressing fiscal sustainability…on the one hand, and preserving short-term growth on the other.”

In his contact with international colleagues, has my hon. Friend found other support for this view or, indeed, any support for the opposing view?

It is quite striking that on one side of the argument, saying that we must be serious about getting the deficit down, there is the OECD, the IMF, the European Commission, the CBI, the Governor of the Bank of England and the US Government, whereas on the other side we have the Labour party. We do not find the Labour party’s case terribly persuasive. On the evidence of last week, nor do the British people.

Does not what happened in Greece show that measures that hamper growth make tackling the deficit all the harder? Is that not why, six months after the geniuses opposite took stewardship of an economy that was beginning to recover strongly, growth had ground to a halt? Is it now why, far from tackling the deficit, which is what all this is supposed to be about, the small print of the Budget shows that the Government will have to borrow £46 billion more?

I know that the hon. Gentleman is close to the former Prime Minister, but it really is disappointing that he is such a deficit denier. He even seems to suggest that the Greeks should not be doing anything about their deficit. If we do not have a credible plan, then the economy is at risk. We do have a credible plan.

First, Mr Speaker, may I associate myself and my Liberal Democrat colleagues with your remarks about David Cairns at the start of Question Time?

On the deficit, the Government’s plans will reduce the fiscal deficit from last year’s figure of 9.6% to 7.9% this year, but that will still be roughly double the eurozone average and higher than the figures for Germany, France, Italy and Spain. Does the Minister agree that if we did not take this action to reduce the deficit, it would undermine international confidence in this country and our ability to borrow the funds that we still need to fund our programmes?

My hon. Friend is absolutely right. Even now, our deficit is higher than Portugal’s and it is perfectly clear that we on the Government side are united and determined to bring that deficit down.