Queens Speech Debate

18th November 2009

During the debate on the Queens Speech, Brooks Newmark questions comparisons being made between the economies of the UK and Germany when Germany is already coming out of recession.

Mr. Brooks Newmark (Braintree) (Con): Unfortunately, I do not think the right hon. Member for Rotherham (Mr. MacShane) did answer the question. The reason why Australia and Canada's institutions have fared better is that they did not have the same lending policies as ours: their debt ratios were much lower and they did not have aggressive policies on lending to the housing sector. The hon. Member for Middlesbrough (Sir Stuart Bell) refers to Germany, but that country is already coming out of recession, as is France. Why is the UK not following suit?

Sir Stuart Bell: I am happy to respond to that intervention. The hon. Gentleman makes a valid point about the debt ratio. We moved into a position-light-touch regulation has been mentioned-where debt became easy and available. The sub-prime mortgage market in the United States, which was the original cause of the economic downturn, enabled house ownership to increase from 55 to 65 per cent., and everyone welcomed that. Everyone welcomed the situation where the debt ratio was going up and up; no one saw that, like a rocket, it would have to come down.

As for comparisons with Germany and France and comparative rates of growth, or lack thereof, even the Bank of England in its inflation report declared that evidence from business surveys and the pattern of past revisions-in this case, of the forecast for the third quarter from the Office for National Statistics-showed that its minus 0.4 per cent. estimate was likely to be revised upward. When that revision takes place, as it will, the hon. Gentleman will see that we are, in fact, in line with the French and the Germans and, essentially, with the eurozone.

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