Pre-Budget Report

Thank you very much, Mr. Speaker. Let me turn to the fiscal rules, which were supposed to safeguard prudence and prevent all this from happening. Even the Chancellor struggled to keep a straight face when he told the House on Monday that he was replacing the fiscal rules with a ““new temporary operating rule””—no rules, no framework, no independent oversight of the kind that our office for budget responsibility would provide. As the chief European economist of a major investment bank put it today:"““The UK has no serious medium-term fiscal framework: the fiscal rules have been abandoned, with nothing to take their place.””" Yesterday, the Institute for Fiscal Studies predicted that if the Government had persevered with the golden rule, they would now be on course to miss it by a mere £296 billion. The bond markets have passed their own verdict on the Chancellor's new temporary operating rule, through the credit default swaps on British Government debt—the cost of insuring someone against the consequences of the British Government's failing to honour their debts. The cost used to be about the same as that of insuring German Government debt, but it is now almost three times as high. Indeed, the markets today take the view that holding the debt of the British Government is riskier than holding the debt of British Petroleum.