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G8: Eurozone and UK Growth

Volume 746: debated on Tuesday 2 July 2013


Asked By

To ask Her Majesty’s Government what discussions the Prime Minister had on the issue of economic growth in the eurozone and the United Kingdom at the recent G8 summit.

My Lords, the G8 summit economic discussion focused on the issues that matter—jobs, growth and mending our economies. The UK’s approach to supporting the recovery through fiscal sustainability, active monetary policy and structural reforms was shared by all other G8 members.

My Lords, I am not sure whether that means anything. However, can the noble Lord tell me whether it means that the Prime Minister explained that there was nothing in last week’s review to help growth? In practice, we may, happily, get some over the next year or so but the Bank of England has reversed its former forecast for 2015. In fact, as the Chief Secretary has said, the expenditure for infrastructure will not start until 2015, so what on earth did the Prime Minister tell the summit about what we are doing to enhance economic growth, which is so vital, between now and 2015?

My Lords, the noble Lord has no doubt seen the report today from the British Chambers of Commerce, which shows that services and manufacturing report confidence rising to levels last seen in the last pre-recessionary period. Service exports reached levels not seen since 1994, and the proportion of the BCC’s members who are exporting rose in a year from 32% to 39%.

My Lords, as recent statistics show that for every public sector job lost five private sector jobs have been created in the past three years, and as unemployment in this country is around 8% and falling, whereas in the eurozone it is 12% and rising, and as we now know that the recession caused the fall in GNP of over 7% under the previous Government’s crisis, can I commend to my noble friend that the Government continue with the policies that are slowly but surely yielding genuine results?

I am extremely grateful to my noble friend for that suggestion, which I shall pass on to my ministerial colleagues in the Treasury.

I know I do not have to tell the noble Lord not to count chickens, and I know I do not have to remind him that good news may be good news but let us wait for things actually to happen. However, to be serious about this subject, surely what is needed is for Britain to get back on to its long-term sustainable rate of growth and, better still, to raise that long-term sustainable rate of growth. Neither of those things can possibly happen for the next three years, despite what the noble Lord opposite said about supporting current policies. Would it not be a good thing if, instead of the individual countries of Europe all going their own separate ways, we at long last had, as was intended when we set up the Common Market, a joint European economic policy? I think that that would lead to major growth throughout this continent.

My Lords, the Government support the efforts being made within the eurozone to develop closer economic co-ordination and they obviously also support some of the measures announced at the last EU summit, which will, to a limited extent, support the combating of youth unemployment.

My Lords, on the other hand, is not the only hope for economic growth to get our political class and its over-regulation off the backs of our productive industry and commerce? Therefore, are not the expressions “economic growth” and “eurozone” a contradiction in terms?

My Lords, the summit also addressed the issue of the international tax regime. Will the Minister recommend to this House the website, which ranks companies as part of its campaign for greater transparency and fairness in corporate taxation? It is rather sober reading for the Government to see who pays tax and who is transparent, and it is most helpful to us as consumers, since consumers and the Government need to work together on these issues.

My Lords, I absolutely agree with my noble friend and I do commend the website to Members of your Lordships’ House. However, I also point out that at the G8 summit significant progress was made on tax transparency, whether in promoting the standards of the Extractive Industries Transparency Initiative, promoting a new global standard for automatic information exchange, or making more information available on beneficial ownership. These are big changes on which the UK is taking the lead.

My Lords, is the Minister aware that the economies of Germany and other countries are far more regulated than ours and are performing far better than ours in terms of sustained growth and exports? Does he accept that it can hardly be regulation that is the fundamental cause of the problems confronted by our people now? Is it not more to do with a stranglehold on consumption, and can he tell us how the further constriction of consumption can possibly help in generating the additional growth that we need to restore the performance of the United Kingdom?

My Lords, the key thing now is to drive unemployment down by continuing growth. That is the way in which consumption will rise. A key element of that is making sure that interest rates stay at a low level, which is the centrepiece of what the Government have been seeking to achieve. I absolutely agree with the noble Lord, Lord Peston, that one should not count chickens, but I think that he is almost wilfully failing to count those very small chickens that may be poking their beaks out into the sunshine.

My Lords, at the summit, did the Prime Minister take the opportunity to discuss with the President of the United States the strategy that it has pursued over recent years? The United States has had a 6% growth rate over that period. That is the growth rate that the Chancellor predicted for us in 2010 and, of course, we have achieved negligible growth over that period. Is it not quite clear that the Government have to change the strategy that they have been following and failing on over the past three years?

My Lords, the Prime Minister has had very constructive conversations with the President of the United States around the key pillars that will provide the basis for growth: an active monetary policy, addressing global imbalances, restoring medium-term fiscal sustainability, and structural reforms.