Spring Forecast Statement

Lord Moynihan of Chelsea Excerpts

Tuesday 17th March 2026 Lords Chamber

[Lord Moynihan of Chelsea (Con)]

Well, here we are again, my Lords; another spring, another Statement. In autumn 2024, the OBR forecast that 2025 GDP growth would be 2%. The reality ended up at 1.3%. Never mind: in spring 2025, the OBR forecast 2026 GDP growth would be 1.9%. In autumn 2025, it downgraded that to 1.4%, and now it has reduced it again to 1.1%. Actual growth in January, seasonally adjusted upwards, was 0%. In the unlikely event that the OBR’s forecast of 1% growth for 2026 is actually achieved, do we understand how appalling that is? It would mean that GDP per capita growth would be near to zero, which is a dog-eat-dog world. Each individual in this country can become better off by the end of the year only at the expense of someone else becoming worse off.

Year after year, the OBR waxes confident about what the future brings: always jam tomorrow, as my noble friend Lord Redwood pointed out, yet none today. Why does the OBR predict growth in 2027, 2028 and 2029 will be better than it has been for the last few years and this year? Does it, or do the Government, have any validated theory of what creates growth? Numbers are not the Government’s strong suit. The Chancellor says that increasing people’s wages is the number one mission. She claims that wages are up in the past year: well, to an extent. Public sector wages went up because the Government gave them lots more of our money. Did wages rise in the private sector? No. Inflation adjusted, wages in the private sector went down last year. Increasing private sector wages requires growing the economy and that is not happening.

Every year we talk about growth but, as speaker after speaker this evening has said, when offered growth-promoting measures, the Government reliably allow sentiment to prevail over logic: feelings, if you like, prevail over facts. They love to attack the private sector as greedy employers. They allege profiteering at the petrol pumps, but, in a free-market economy there is always another petrol station 500 yards down the road to undercut you if you raise prices by even a few pence per litre. On the other hand, the Government’s take is 55% of the petrol price, 10 times the retailer’s gross margin. When crude goes to $100, of course pump prices go up. But who profits most from that? Why, it is the Government, charging an extra 20% VAT on the uplift, with no petrol station 500 yards down the road to be found with lower fuel duty or lower VAT. How ridiculous, how anti-growth, to accuse business of profiteering when the Government snatch a windfall £1 billion a year from citizens as they go about their business trying to make ends meet. In the US, petrol is half the price it is here.

The triumph of sentiment over logic pervades the Government’s economic approach, with large public sector wage increases with no improvement in productivity and a failure to address the ballooning size of welfare payments—and, as I think the noble Lord, Lord Davies, knows well, neither the noble Lord, Lord Elliott, nor I refer there to pensioners. The minimum wage has been racked up, thus increasing unemployment, especially for youth. An avalanche of regulation is coming from the Employment Rights Act and the Act’s appointed regulator is a former Stonewall board member, trans activist and career civil servant from the Environment Agency, who will know nothing about running a business but will have the power to enter premises, seize records and run wide-ranging and costly investigations whenever they feel like it. This is crazy.

Nowhere is the Government’s logic-free approach more evident than in their disastrous net-zero policy, devastating the economy, threatening key future energy-intensive sectors such as AI, which depend on cheap electricity, and devastating household budgets with electricity costs among, as noble Lords have said, the highest in the world. Our reliance on intermittent renewables requires plenty of gas, which in addition will always have hundreds of different uses across our entire economy. The cheapest source of gas for us, with the lowest carbon footprint, is the North Sea. As my noble friend Lady Neville-Rolfe said, jobs could be created, emissions reduced, energy security transformed and large sums of tax money paid, yet this Government wage war on North Sea gas, fantasising sentiment over logic.

The overwhelming evidence is that you do not get decent economic growth without small government, low taxes and minimal and helpful regulation. Instead, the size of our government, our taxes and our growth-destroying regulation mushrooms. Individuals in even the poorest parts of America can earn twice as much in salary as we do here for the same job, exactly because the shape of the US economy promotes economic growth and ours does not.

To conclude, I respectfully urge this Government to reverse course and make it easier for entrepreneurs to start companies and hire people without fearing that they will be stuck with the employees for life. As my noble friend Lord Sherbourne and the noble Lord, Lord Pitt-Watson, rightly said, growth comes from business, not government. Close down those growth-destroying regulators and quangos and, with what you save, stop taxing enterprise so much and make it more attractive for investment to come to this country. Get the cost of electricity down by abandoning the destructive net-zero initiative so that companies can run more cheaply, home heating will be less expensive, and it will be cheaper to drive to work or on business. If you do this, there may be a chance that growth will gradually recover and, who knows, you might even rescue some of your popularity with the electorate.