Fishburn Hedges

21.10.2011

With the Autumn Statement due on 29^th Nov, we gathered together a panel at The Royal Institution of Chartered Surveyors (RICS) to discuss what’s next for the economy.

The speakers were:

Jesse Norman MP (Con), Hereford and South Herefordshire
Nick Pearce, Director of IPPR
John Longworth, Director-General of the British Chambers of Commerce

Chair: Laura Kuenssberg, ITV News Business Editor

 

The panel each aired their views on three topics: credit easing, the upcoming Autumn statement, and Labour’s alternative economic plan.

 

Credit easing

The panel agreed that credit easing will be a vital cornerstone of the Autumn Statement – but no one yet knows exactly what it will involve, and the devil will be in the detail. The headline goal is clear: to provide more credit directly to SMEs, separate from traditional bank finance.

Jesse Norman outlined two problems: first, the risk of credit easing in the UK being seen by Brussels as state aid; and second, the risk of "negative selection", where banks offload the debts of failing companies onto government. He said the Treasury would most likely set up a "pseudo public institution" to transact credit easing. John Longworth said his 104,000 members had displayed a high degree of positive sentiment until recently, but many were now expressing concern about the lack of working capital. He was worried that an export-led recovery was now being "starved of oxygen". Nick Pearce cited Adam Posen's recent speech, including his proposal for a Small Business Investment Bank. He noted that Harold Wilson’s government was the last that had lent directly to small businesses.

Autumn Statement

John Longworth supported the Government's planning reforms: they would not result in "tarmacking over Downton Abbey". He said the Chancellor had more “wiggle room” on deficit reduction than he was letting on, and called for more investment in infrastructure. Jesse Norman criticised the Private Finance Initiative as an "abomination", because it had resulted in government paying more than necessary. Nick Pearce said the Chancellor's target to eliminate the structural deficit would slip from 2014/15 to 2015/16, and there was now increasing talk of spending cuts continuing beyond 2015. Jesse Norman accepted but played down the prospect of the structural deficit not being eliminated by 2015, as the Chancellor had promised last year.

Is Labour's alternative plan credible?

Nick Pearce said the deficit was caused not by Labour's overspending, but by a collapse in tax revenues. But the public still didn't trust Labour with the public finances. He gave the example of Germany, which had a recession as deep as ours but a deficit only a quarter of the size.