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Finance Bill

If the hon. Gentleman will be kind enough to give me a few seconds to develop my argument, I will come to that point. The Budget projection for 2010 of 1¼ per cent. growth was widely ridiculed in the media and compared with the IMF projection of, I believe, negative 0.3 or 0.4 per cent.; according to the IMF, we will still be in recession. If we take the average of all recent forecasts, growth does return to the economy; it is something like 0.3 or 0.4 per cent, which is a good deal closer to what the Treasury is suggesting, although of course still significantly less. That is one reason why the epithet "optimistic" has been used, which was very much at the centre of our debate in the Treasury Committee. If we then project forward a further year—I would hesitate to take with any great accuracy a projection made that far into the future—the average of forecasts is roughly 2¼ to 2½ per cent. growth. As the Budget figures suggest, the Treasury selects 3½ per cent. I would raise questions about how accurate any such forecasts could be, but let me say why I think that, although the Treasury is veering towards the optimistic side, it may not be an unreasonable forecast. The first reason is that in previous recessions, such as those of the early '80s or the early '90s, when the recession bottomed out there was spare capacity in the economy, which made it possible for recovery to occur relatively quickly and at an above-trend growth rate. The Treasury has therefore assumed that we will have a relatively faster bounce-back from the end of the recession. Secondly, we have an extraordinary stimulus in the economy—not just the automatic stabilisers, not just the activities of the Bank of England, but a significant depreciation in the value of sterling, which should open opportunities to re-phase our economy to export more into the future. Perhaps the most important reason, and the one that is being challenged in alternative forecasts, is the assumption in the Budget that agreements made at the G20—international action to stimulate economies across the world—will be honoured. I do not know whether that will happen, but I think it is reasonable to assume that other economies will take similar action. They have all announced that they will, and therefore one can assume that, although those Budget projections are on the optimistic side, they are based on fairly good economic analysis. I shall now discuss the ONS announcement of a contraction of 1.9 per cent. in GDP in the first quarter. The hon. Member for Ludlow (Mr. Dunne), who I know takes a great interest in these matters, will know that those figures were very much initial figures, based on only 50 per cent. of the evidence that will become available. When we asked the Treasury's economic guru about those figures, he said not only that he expected them to change going forward, as they often do, but that he saw no reason to re-evaluate the projections for this year, and I would accept that at this stage we should not do that. Therefore, my first point—I have laboured the point because of all the press and other comment that there has been—is that, in my view and I think in that of most independent forecasters and economic commentators, the Budget projections are within the realms of possibility. The idea that they should all be entirely rubbished really must be challenged, and that is what I have sought to do. Let me come on to the public finances. It is amazing that everyone on the Opposition Benches who has commented today has cast into doubt whether we have an honest appraisal of the problem that we will face with our public finances. This Budget is honest about that. Opposition Members have quoted the figures. When you tell us how terrible the situation is, you do not use alternative figures; you use the Budget figures to do so.