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Finance (No. 4) Bill

Between 1997 and 2007 this country's debt ratio fell from 42.5% to 36% of GDP, so the debt burden fell; in 2007, our debt-to-GDP ratio was lower than when we came to power in 1997. What hope did the Chief Secretary and the Chancellor offer in this Budget for the future of our economy? The answer is precious little. The Government's own Office for Budget Responsibility predicts another year of low growth ahead; it predicts just 0.8% growth in 2012, followed by 2% growth in 2013. That is well below what was promised when the Government took office. According to this morning's forecasts from the Ernst and Young ITEM—Independent Treasury Economic Model—club, even those dire outlooks now seem optimistic. Ernst and Young predicts just 0.4% growth for 2012, followed by 1.5% growth the year after. Meanwhile, on any prediction, including the Government's, we will still have at least 2 million unemployed people by the end of this Parliament. Even those figures conceal deeper failures and more disturbing trends. Some may remember the Chancellor's promise of a new economic model for Britain, based on lower levels of borrowing, and higher levels of saving and investment. In reality, the promised renaissance of business investment has been repeatedly postponed. An 8% increase in investment was promised for 2011, but investment actually fell by 2%. A further 10% increase was predicted for this year, but an increase of less than 1% is now forecast. The role of investment in driving growth for future years has been significantly revised down, too. Ernst and Young said this morning that business spending"““has picked up nicely in the US””" but that UK plcs remain ““extremely reluctant”” to invest. It continues:"““Consequently, the economy is bleeding cash into company coffers at an alarming rate…This haemorrhage is sapping the strength of the economy, keeping it on the critical list.””" They are not my words, but those of the Ernst and Young ITEM club. Meanwhile, figures from the OBR reveal that the Government have increasingly become reliant on household consumption for their growth forecasts. That consumption is not being financed by growth in real disposable incomes, which, as I said, have stagnated and which the OBR confirms are set to stagnate for at least another two years. The household consumption growth is being funded by a fall in savings every year from now until 2016 and by a rise in total personal debt of almost 50% over the next few years; it will reach a staggering total of £2.12 trillion by the end of this Parliament.