Government’s EU Exit Analysis

Debate between Alison McGovern and Lord Clarke of Nottingham

Wednesday 31st January 2018 Commons Chamber

[Mr Kenneth Clarke (Rushcliffe) (Con)]

The Speaker got an ambiguous reply from me, and I will explain why in a moment, but first may I add my sympathies to those already expressed in the House, Mr Deputy Speaker, and say how delighted I am to see you back in the Chair?

I will explain why I hesitated when the Speaker asked me if I wanted to speak. First, I think—I will have to check—I agreed with every word that the right hon. Member for Leeds Central (Hilary Benn) just said. I was also hugely impressed by the speech made by my right hon. Friend the Member for Broxtowe (Anna Soubry). I was not at all sure, therefore, if I would try to catch your eye, Mr Deputy Speaker, because I did not wish to detain the House by simply repeating the arguments they gave, as other people want to speak. By my standards, therefore, I hope I shall make what might be described as a long intervention—I usually intervene for longer than other people anyway.

I want to comment on the status of these economic analyses and how one should use economic analyses, and what has been presented here. Brexiteers make a great deal in their arguments, when they try to dismiss the documents we are all going to see, of the inaccuracy of some of the documents put out at the time of the referendum. There is no doubt that the authorities then put out forecasts, in good faith, in which they overestimated the short-term consequences of the vote. It has to be said that some of those campaigning on the remain side—David Cameron and George Osborne, I am afraid, who are both friends of mine—grossly exaggerated the material they had, such that the arguments on the remain side in the national media, at times, were almost as silly as those on the leave side—on the question of money for the health service or Turks coming to this country. It was a wholly unsatisfactory campaign.

We should not exaggerate how wrong those forecasts were. The vote to leave has already made this country poorer than it would have been. The living standards of many people in this country are lower now than they would have been had we voted to remain. The vote produced an unfortunate devaluation in the pound and a surge in inflation at a time when very many people’s wages could not follow it, and that has had consequences. On the lack of any policy, I would defend my Government’s not having a policy yet on what they are trying to negotiate by pointing out that the Opposition party does not either. The right hon. and learned Member for Holborn and St Pancras (Keir Starmer) wisely declined to answer the question of whether the Labour party was in favour of staying in the customs union because he has not a clue what the Labour party’s view will be once it has settled its internal arguments—but that is a diversion.

The fact remains that we have already damaged ourselves. We are experiencing some economic growth, although it is not benefiting every section of the population, but that is because the global economy is, to everybody’s surprise, doing rather better than was expected six months ago. There is global growth. No one is quite certain why. I am certainly not, but it is beginning to look quite strong—it is strong in the United States and the European Union, and it is not too bad out in China—and as always we are benefiting from that. It was unforeseeable when the forecasts were made last summer, but now we have this strong surge, and we do not know how sustained it will be. It all looks a little fragile—there are one or two uncertainties about—but it is lifting the British economy a little, and I am glad that it is. But, because of the impact of the referendum, growth in this country is pretty feeble compared with the rest. We are the laggard in the G7. We are the laggard among the European economies against which we normally match our performance. That is the damaging consequence of the vote cast in the referendum in 2016.

[Alison McGovern]

Does the Father of the House agree that the extraordinary actions taken by the Governor of the Bank of England in response to the vote are very poorly understood, which creates an even worse impression of the forecasts made beforehand?