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gabrillowise · 7th January 2008, 06:38 PM

"At the core of this pre-Budget report is the belief that the Britain of long term economic strength will be:

the Britain that at a time of rapid global change and uncertainty locks in our economic stability for the long-term;

the Britain that, as by 2015 Asia acquires a growing share of low cost production, resolves to invest in hi-tech, high value added manufacturing and services through world leadership in science and technology;

the Britain that, with enterprise and high skilled jobs now the key to long term prosperity, takes the tough decisions to achieve American levels of business creation and has, at every level, the best educated and most flexible workforce in the world;

a Britain of opportunity for all that, with today's long-term Budget measures, supports families and ensures every child and young person the best start in life. First, Mr Speaker, measures to entrench stability.

In last year's Budget I forecast growth for this year between 3 and 3 and a half per cent.

When I made our forecast the Leader of the Opposition said it was not just wrong but a deliberate misrepresentation of Britain's economic position and not to meet it would destroy credibility.

I can report today to the House that growth this year will be, as I forecast, above 3 per cent - three and a quarter per cent.

In other words Britain will extend the longest period of uninterrupted growth in the industrial history of our country.

Let me give the House the detailed figures.

First, even after the doubling of oil prices, CPI inflation this year is one and a quarter per cent.

In any other decade a 100 per cent increase in oil prices, a 50 per cent rise in industrial materials prices and a 70 per cent rise in metal prices would have led to inflation and instability.

But with continued and necessary discipline among wage bargainers in the private and public sector and the resilience of our new monetary and fiscal framework, inflation is expected to be just 1.75 per cent next year and 2 per cent in the years to follow.

All policy makers will keep a close eye on continuing risks from global trade imbalances, exchange rate movements and an uneven world recovery, but with manufacturing output growing this year and next, British business investment is expected also to rise - this year by five and three quarters per cent and next year by four and a half to five per cent.

With the expected moderation in house price inflation now underway and as export and industrial production strengthens, domestic demand which has been growing by four per cent this year is forecast to grow by three to three and a half per cent in 2005; and we expect consumption to grow by three and a quarter per cent this year and by two and a quarter to two and three quarters per cent in 2005.

And with overall domestic investment growing next year by six and three quarters to seven and a quarter per cent, exports rising in line with world trade at more than six per cent, and inflation below its target, growth overall is projected for 2005 at three to three and a half per cent, in line with the average growth rate of G7 countries.

We will remain vigilant to inflationary pressures, both globally and in Britain. But Mr Speaker it is the success of the Bank of England's forward looking approach that is key to sustaining growth with low inflation, just as since 1997 it has maintained both inflation and interest rates at historic lows.

The Pre Budget Report shows that since 1997 interest rates have averaged 5.3 per cent, at half the 10.4 per cent average from 1979 to 1997.

And mortgage rates have averaged 6.1 per cent since 1997, almost half the 11.4 per cent average from 1979 to 1997.

Since 1997 Britain has 1.2 million additional homeowners. And as we take forward the Barker Review and the Deputy Prime Minister publishes his five year housing and sustainable communities strategy, we will pilot mixed communities in deprived estates and provide further support for first-time buyers.

Mr Speaker, since 1997 mortgage rates have been lower than in any seven year period since the late 1960s.Interest rates have been lower than in any seven year period since the early 1960s.

Inflation has been lower than in any seven year period since the 1930s.And employment has been higher than in any seven years since records began.

Back to top Mr Speaker, let me sum up for the benefit of the House.

Inflation at 1.2%, claimant unemployment 2.7%, interest rates 4.75%, growth rising by 3%, living standards by 3%.

The best combination of low inflation, low unemployment and rising living standards for decades.

The strength of our economy is matched by strength that comes from the decisions we made after 1997 to cut our national debt.

Yesterday I announced £520 million for the Special Reserve for Iraq and our international obligations. And I thank our armed forces for their dedication and courage.

Having since September 11th doubled the budget to 2008 for security at home, I am releasing a further £105 million for necessary security measures to counter terrorism, enhance surveillance at ports and improve civil resilience.

The pre-Budget report sets out detailed savings achieved of £2 billions in procurement; an additional one third of a billion saved in NHS drugs procurement; and, on target, the reduction of the first 9,000 civil service posts ---- as we implement the Gershon principles: a £21 billion efficiency saving while at the same time accepting his recommendation that to go beyond this figure would put the delivery of front line services at risk.

I can also announce the relocations of 1,230 Ministry of Defence posts from the South East to North Yorkshire; 2,300 DWP posts to Liverpool, Wrexham, Newcastle and elsewhere; 600 from the Office of National Statistics to South Wales; 220 from Revenue and Customs to Cardiff, Liverpool, Bournemouth, Truro and Manchester ¿ further steps on the way to a total by 2010 of 20,000 civil service jobs relocated to the regions.

Sir Michael Lyons is also setting out today departmental guidelines for the disposal by 2010 of £30 billions of public assets.

And because there remains scope for further rationalisation and sale of public sector spectrum, I have asked Professor Martin Cave to lead a comprehensive audit of public sector spectrum with the aim of releasing the maximum amount of spectrum to the market.

Mr Speaker, lower debt has meant that debt interest payments each year are £4 billion less than in 1997. And because we have more people in work than other countries - 75 per cent of adults in work compared to 71 per cent in the US, 69 per cent in Japan, 65 per cent in Germany and 63 per cent in France - social security bills for unemployment are also down by £4 billion a year.

Having previously set both the fiscal numbers and the detailed spending plans for the years 2005 to 2008, the public finance projections I have set out today are based on our cautious view of trend growth in the years to 2010 and on public spending rising from £579 billions in 2007-8 to £606 billions in 2008-9 and then to £634 billions in 2009-10.

When in the Budget I estimated borrowing at £37.5 billions some external commentators suggested this was an underestimate. At the same point in the economic cycle ten years ago the equivalent figure was £90 billions. But I can report that our final outturn for the year to April is not £37.5 billions but £35 billions.

And even after taking into account additional expenditure on defence and security, and other decisions I will announce today including on fuel duties and on the council tax, the cash figures for net borrowing for this year will fall to £34 billions and in future years fall further to £33 billions, falling again to £29 billions, then falling to £28 billions, £24 billions and £22 billions.

The deficit in 2004 is 3.9 per cent of GDP in Germany, 3.7 per cent in France, 4.4 in America and 6.5 in Japan.

In Britain the figure is 2.9 per cent and in future years falling to 2.7, 2.2, two, 1.6 and 1.5 per cent..."

7th January 2008, 06:38 PM	#10 (permalink)
gabrillowise Senior Member Join Date: Jan 2004 Location: the forest haven Posts: 2,009	"At the core of this pre-Budget report is the belief that the Britain of long term economic strength will be: the Britain that at a time of rapid global change and uncertainty locks in our economic stability for the long-term; the Britain that, as by 2015 Asia acquires a growing share of low cost production, resolves to invest in hi-tech, high value added manufacturing and services through world leadership in science and technology; the Britain that, with enterprise and high skilled jobs now the key to long term prosperity, takes the tough decisions to achieve American levels of business creation and has, at every level, the best educated and most flexible workforce in the world; a Britain of opportunity for all that, with today's long-term Budget measures, supports families and ensures every child and young person the best start in life. First, Mr Speaker, measures to entrench stability. In last year's Budget I forecast growth for this year between 3 and 3 and a half per cent. When I made our forecast the Leader of the Opposition said it was not just wrong but a deliberate misrepresentation of Britain's economic position and not to meet it would destroy credibility. I can report today to the House that growth this year will be, as I forecast, above 3 per cent - three and a quarter per cent. In other words Britain will extend the longest period of uninterrupted growth in the industrial history of our country. Let me give the House the detailed figures. First, even after the doubling of oil prices, CPI inflation this year is one and a quarter per cent. In any other decade a 100 per cent increase in oil prices, a 50 per cent rise in industrial materials prices and a 70 per cent rise in metal prices would have led to inflation and instability. But with continued and necessary discipline among wage bargainers in the private and public sector and the resilience of our new monetary and fiscal framework, inflation is expected to be just 1.75 per cent next year and 2 per cent in the years to follow. All policy makers will keep a close eye on continuing risks from global trade imbalances, exchange rate movements and an uneven world recovery, but with manufacturing output growing this year and next, British business investment is expected also to rise - this year by five and three quarters per cent and next year by four and a half to five per cent. With the expected moderation in house price inflation now underway and as export and industrial production strengthens, domestic demand which has been growing by four per cent this year is forecast to grow by three to three and a half per cent in 2005; and we expect consumption to grow by three and a quarter per cent this year and by two and a quarter to two and three quarters per cent in 2005. And with overall domestic investment growing next year by six and three quarters to seven and a quarter per cent, exports rising in line with world trade at more than six per cent, and inflation below its target, growth overall is projected for 2005 at three to three and a half per cent, in line with the average growth rate of G7 countries. We will remain vigilant to inflationary pressures, both globally and in Britain. But Mr Speaker it is the success of the Bank of England's forward looking approach that is key to sustaining growth with low inflation, just as since 1997 it has maintained both inflation and interest rates at historic lows. The Pre Budget Report shows that since 1997 interest rates have averaged 5.3 per cent, at half the 10.4 per cent average from 1979 to 1997. And mortgage rates have averaged 6.1 per cent since 1997, almost half the 11.4 per cent average from 1979 to 1997. Since 1997 Britain has 1.2 million additional homeowners. And as we take forward the Barker Review and the Deputy Prime Minister publishes his five year housing and sustainable communities strategy, we will pilot mixed communities in deprived estates and provide further support for first-time buyers. Mr Speaker, since 1997 mortgage rates have been lower than in any seven year period since the late 1960s.Interest rates have been lower than in any seven year period since the early 1960s. Inflation has been lower than in any seven year period since the 1930s.And employment has been higher than in any seven years since records began. Back to top Mr Speaker, let me sum up for the benefit of the House. Inflation at 1.2%, claimant unemployment 2.7%, interest rates 4.75%, growth rising by 3%, living standards by 3%. The best combination of low inflation, low unemployment and rising living standards for decades. The strength of our economy is matched by strength that comes from the decisions we made after 1997 to cut our national debt. Yesterday I announced £520 million for the Special Reserve for Iraq and our international obligations. And I thank our armed forces for their dedication and courage. Having since September 11th doubled the budget to 2008 for security at home, I am releasing a further £105 million for necessary security measures to counter terrorism, enhance surveillance at ports and improve civil resilience. The pre-Budget report sets out detailed savings achieved of £2 billions in procurement; an additional one third of a billion saved in NHS drugs procurement; and, on target, the reduction of the first 9,000 civil service posts ---- as we implement the Gershon principles: a £21 billion efficiency saving while at the same time accepting his recommendation that to go beyond this figure would put the delivery of front line services at risk. I can also announce the relocations of 1,230 Ministry of Defence posts from the South East to North Yorkshire; 2,300 DWP posts to Liverpool, Wrexham, Newcastle and elsewhere; 600 from the Office of National Statistics to South Wales; 220 from Revenue and Customs to Cardiff, Liverpool, Bournemouth, Truro and Manchester ¿ further steps on the way to a total by 2010 of 20,000 civil service jobs relocated to the regions. Sir Michael Lyons is also setting out today departmental guidelines for the disposal by 2010 of £30 billions of public assets. And because there remains scope for further rationalisation and sale of public sector spectrum, I have asked Professor Martin Cave to lead a comprehensive audit of public sector spectrum with the aim of releasing the maximum amount of spectrum to the market. Mr Speaker, lower debt has meant that debt interest payments each year are £4 billion less than in 1997. And because we have more people in work than other countries - 75 per cent of adults in work compared to 71 per cent in the US, 69 per cent in Japan, 65 per cent in Germany and 63 per cent in France - social security bills for unemployment are also down by £4 billion a year. Having previously set both the fiscal numbers and the detailed spending plans for the years 2005 to 2008, the public finance projections I have set out today are based on our cautious view of trend growth in the years to 2010 and on public spending rising from £579 billions in 2007-8 to £606 billions in 2008-9 and then to £634 billions in 2009-10. When in the Budget I estimated borrowing at £37.5 billions some external commentators suggested this was an underestimate. At the same point in the economic cycle ten years ago the equivalent figure was £90 billions. But I can report that our final outturn for the year to April is not £37.5 billions but £35 billions. And even after taking into account additional expenditure on defence and security, and other decisions I will announce today including on fuel duties and on the council tax, the cash figures for net borrowing for this year will fall to £34 billions and in future years fall further to £33 billions, falling again to £29 billions, then falling to £28 billions, £24 billions and £22 billions. The deficit in 2004 is 3.9 per cent of GDP in Germany, 3.7 per cent in France, 4.4 in America and 6.5 in Japan. In Britain the figure is 2.9 per cent and in future years falling to 2.7, 2.2, two, 1.6 and 1.5 per cent..."