Over the last two years, we have been through some of the toughest retail trading conditions for decades and lost some familiar names from our high streets. The Government has backed businesses up in some important ways and, when we look back, will have helped to make the recession shorter and shallower. And, at a time when our economic prospects are improving, this is not the moment to pull that support away. Given the lingering impact of the financial crisis and continuing tight credit conditions, the Confederation of British Industry is right to say that the fiscal and monetary stimulus are both still needed.
The CBI is in good company: across the G20 economies there is unanimity that early exit from the stimulus measures would put the recovery at risk. Our big immediate challenge is locking in the recovery, not wrecking it. We need a long-term policy for rebalancing the public finances. But growth is the best counter to recession and the best antidote to debt. That means maintaining the present course: underpinning demand in the economy, sorting out the banks, stopping unemployment becoming long-term joblessness, especially among the young, and co-ordinating these policies internationally and in the EU.
We also need to invest in our future skills, technologies and growth markets and sectors from where many future jobs will come. Reducing the deficit is not a question of if, but when and how. We all know that. But an approach to rebalancing public finances that is too early, too hasty or too indiscriminate would undermine the very growth on which locking in the recovery depends. It would raise the costs of unemployment, thus causing the deficit, rather than cutting in it half in four years, as we have announced our intention to do.
Frankly, those who advocate this course are either economically illiterate, or irresponsible, or both. The next few years are going to bring real constraints. I have no more time than you do for airy-fairy, wish-list politics, but neither do I have any time for shallow analysis or short-term headline grabbing. As a frontline sector that depends on demand and growth more than most – retail is right to challenge government to get this right. I accept that challenge.
From the Business Secretary's speech to the British Retail Consortium on Wednesday