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Pre-Budget Report

We come to the crux of the disagreement between us and the Government. If there were no factors other than the level of demand implied by fiscal stimulus, the hon. Gentleman would have a point, but the fact is that what has kept Britain going through this recession and what will see Britain grow in the recovery are continued low interest rates and relatively loose monetary policy. We do not have an automatic option of maintaining a fiscal deficit at the level that the Government would like to maintain and still being able to keep monetary policy as loose as it is now. That is the crux of the disagreement between us. In my view, there are many members of the Government who understand that perfectly well, but the Prime Minister has chosen, for electoral reasons, to ignore those voices and to insist that he maintains his fiscal stance until after the general election.