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Comprehensive Spending Review

The OBR also said, in paragraph 1.3, that the recovery from this recession will be slower and more sluggish than from those of the 1970s, 1980s and 1990s, because of the Government’s mistaken policies. The hon. Gentleman must know that such growth as there is in the pipeline is as a result of the action that we took as a Government. He knows that economic indices on employment and growth take about a year to work through the system. As a result of the action that we took, growth has been stronger than forecast in this last year. What is real is that the OECD has slashed its forecast for UK Government growth next year from 2.5% to 1.7%. The latest CBI industrial trends survey suggests that manufacturing expectations have collapsed. The Office for National Statistics’ retail sales figures show that households are reining back on spending. October saw a welcome fall in the unemployment rate in Wales, but the Institute of Directors has warned that such figures may give a false sense of security. It expects the UK labour market to weaken in 2011. There is a difference between a squeeze and a straitjacket. Plenty of experts—not just the Institute for Fiscal Studies—warn that the Chancellor may have gone too far, that his constraints on expansion are too tight and that he may need to ease the fiscal squeeze. In short, he may need a plan B. The latest figures for GDP growth show a fallback from the second quarter’s results. The danger is that the economic recovery may lose momentum and that the Chancellor’s measures are damaging what might be called the economy’s bounceback ability.