Brown insists Britain 'can come through' downturn

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The Prime Minister today again insisted that Britain was "better prepared" for the looming recession and "can come through" the economic downturn.

But Opposition Leader David Cameron said European Commission forecasts showed Britain was facing a deeper recession next year than any other major EU economy.

Calling for an inquiry into "regulatory failure" in the financial markets, he said Britain was the "worst prepared" economy for the financial crisis and Mr Brown was "wrong".

Mr Cameron said: "This week the EC said that Britain is facing a deeper recession next year than the US, Japan or any major EU economy.

"You kept telling us that Britain was better prepared to face the recession. In fact, we are the worst prepared. Why were you wrong?"

Mr Brown said: "This is the only time you've quoted the EC. The reason why we are better prepared than other countries is that for years we have had low interest rates, we are now getting inflation down and it will come down in the next year.

"We have high levels of employment - higher than almost every other major industrial country - and we can come through this.

"At the same time corporate balance sheets are strong outside the financial sector and not in the position they were when you were the financial adviser to the Chancellor in 1992.

"We are taking the long term decisions about this country - on nuclear power, energy, infrastructure and planning - but we are not supported by your party."

Mr Cameron said: "You cannot hide from this. If we are better prepared, why is our recession forecast to be deeper.

"For years you've stood there reading out lists of countries you told us we were beating. Yet according to the Commission our recession will be worse next year than in Germany, France, Italy, Sweden, Spain, Greece or the US.

"In fact, there are just two countries that we are going to do better than - Estonia and Latvia. They escaped the grip of Stalin. We're still in it!

"You said Britain was better prepared. Why did you get it wrong?"

Mr Brown retorted: "I said that Britain is better prepared for the reasons I've just given you.

"You don't understand that when we rejected your policies and made the Bank of England independent and took the right course, we've had 10 years of economic growth, 10 years of stability, 10 years where three million jobs have been created.

"If you want to compare recent figures on the EU, Germany was in negative growth in the second quarter, France and Italy too. We were not in negative growth in the second quarter."

Mr Cameron said the Government had also taken a "terrible decision" over the Bank of England by "taking it out of regulating the level of debt" in the economy.

Wasn't one of the reasons the recession was predicted to be deeper because "we have got such high levels of personal debt.

"Will you confirm that we have the highest level of household debt of any major economy," he demanded.

"Don't you understand you cannot build new Jerusalem on a mountain of debt?"

Mr Brown said public debt levels in the UK in 2008 were lower than in France, Germany, Italy or Japan. "You've got to look at personal and public debt together."

Mr Cameron said the IMF had repeatedly warned the Government about the high levels of personal and Government debt.

"I don't know why you didn't just agree with my question because this is what you told the Labour Party conference in 1995: 'I say to those who propose we simply tax, spend and borrow that it's because I care about our responsibility to future generations that I tell you we will not build the new Jerusalem on a mountain of debt'.

"The fact is we've got the highest personal debt of any country in the world, one of the highest budget deficits in the world and our regulation system has failed.

"In fact it failed so badly that your new Treasury minister, Lord Myners, told the House of Lords this week he wanted to see a public inquiry into the regulatory failure.

"Can you tell us when we're going to have that inquiry."

Mr Brown replied: "The Financial Secretary said no such thing and I believe you are proving every time in this House that you are a novice in parliamentary procedure."

Mr Brown said he was referring to "low national public debt" and after 1997 the Government had reduced debt from 44% of national income to 38% this year.

"If you want to go back in history you should remember your role as economic adviser to the Conservative Government when three million people were unemployed and we had interest rates at 18%."

He said the only change the Tories represented was "that they change their minds every week".

Mr Cameron said he had not misrepresented Lord Myners. He was asked: "'If we are going to hold inquiries, do we not need a wider public inquiry'. Lord Myners said: 'My Lords, I agree with my noble friend'.

"That is what he said. He said he'd have a public inquiry. We should have one.

"Isn't the truth that in Britain people are losing their homes, small businesses are closing, unemployment is rising, manufacturing output again today is falling and by refusing to hold a public inquiry, you're yet again demonstrating that you cannot provide the change people want."

Mr Brown said US voters had voted for progressive policies, like a "fiscal stimulus" opposed by the Tories, and a rising minimum wage, opposed by the Tories.

"The truth is that the Conservative Party policies are rejected in America and in Britain by people who do not want to pursue them. "