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Budget Resolutions and Economic Situation

We have heard quite a lot already about the economic situation. The context for the Budget is one of economic stagnation. The growth forecast produced last year for this year was for growth of 2.5% in 2012. The OBR's estimate now of growth in 2012 is just 0.8%. The growth forecast for 2013 is also 0.8%. That is close to stagnation. Unemployment is rising, the cost of living is rising, and it is particularly worrying that business investment appears to be collapsing. The OBR forecasts that business investment this year will drop 7%, from an estimate of 7.7% to 0.7%. That is connected with the OBR's forecast for such meagre growth as there is to be, according to its estimate. A much larger share of this growth—three times larger—is to come from private consumption rather than from export-led growth. We have a demand crisis in the economy. I worry that the Chancellor is putting all his eggs in one basket, rather like Japan did in the 1990s, gambling everything on low interest rates as a way to stimulate the economy.