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Value Added Tax

My hon. Friend is absolutely right; unsurprisingly, perhaps, I shall come to Mr. Steinbrück in a moment. Far from being well prepared, Britain is uniquely vulnerable to the reality of a bust that has followed the illusion of a boom. Unlike their neighbours and competitors, which used the good years to pay down Government debt, our Government went on borrowing, so that we are entering the recession with a huge structural deficit. On top of that structural deficit, we are going to pile the additional borrowing that the automatic stabilisers naturally deliver in a recession. We shall get to more than £100 billion of borrowing next year, even before the Prime Minister's proposed fiscal stimulus is added. That will double our national debt to £1 trillion. That leaves us not well prepared, but, in the words of Alan Greenspan, more vulnerable than any other major economy. In the words of the Minister for the Olympics just two days ago, Britain now faces"““a recession deeper than any that we have known””" —deeper than those of the 1980s and 1990s. That is the prediction of a senior member of the Prime Minister's Government. People do not need to go to Germany, as my hon. Friend the Member for Daventry (Mr. Boswell) suggests, for a verdict. They do not need to go to Brussels, to the European Central Bank or even to the currency markets, which are sending a pretty clear signal. They do not need to listen to the Opposition to get a verdict on the Prime Minister's policy; they can hear it openly and publicly expressed by one of his own senior Ministers. Leaving that Minister aside for the moment, the Prime Minister seems mainly to be basing the justification for his policy initiative on the endorsement he claims to have from foreign observers. He says that everybody except those on the Conservative Front Bench supports his plan for a fiscal stimulus funded by yet more borrowing, so I have been looking at what various people have actually said about the Prime Minister's proposals, and I have discovered that, on his definition, the Conservative Front Bench has turned into rather a broad church. Indeed, it welcomes the German SPD Foreign Minister who said:"““Just because all the lemmings have chosen the same path, it doesn't automatically make that path the right one””." For political balance, he would be joined on our Front Bench by the CDU budget spokesman, who says:"““The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy.””" Next along would be the president of the European Central Bank, who explained that fiscal policies need to ensure the longer-term sustainability of public finances, implying for some countries that there is no leeway for fiscal loosening. He says:"““You have unfortunately countries that have already no room for manoeuvring. In those particular cases fiscal activism, instead of having a positive impact on the economy, could harm confidence””." And the EU Commission—an unlikely joiner of our Front Bench—says:"““It is clear that not all Member States are in the same position. Those that took advantage of the good times to achieve more sustainable public finance positions... have more room for manoeuvre now…For those Member States, in particular those outside the euro area, which are facing significant imbalances, budgetary policy should essentially aim at correcting such imbalances.””" I do not think that there could be a clearer or more specifically targeted reference to the UK without naming it directly.