Economic Growth

Neil Carmichael Excerpts

Wednesday 15th May 2013 Commons Chamber

[Neil Carmichael (Stroud) (Con)]

It is a great honour to follow the hon. Member for East Antrim (Sammy Wilson).

This debate is about economic growth, and quite right too. It is good that the Governor of the Bank of England has signalled that growth is on its way and that inflation is likely to decline. That is a good combination. It is absolutely right, therefore, that we should focus on monetary activism.

Another important matter to which the Gracious Speech referred was supply-side reform. We still need to achieve elements of that, and we still have two years to do so. It is at the core of rebalancing the economy, so I want to say a word or two about supply chains. We labour under an illusion in our arguments about the trade deficit if we do not understand the complexity of supply chains and their importance across Europe and the globe. It is not just the finished product that matters but the components that make it, which provide added value. The Department for Business, Innovation and Skills is looking into that matter, because if we understand supply chains we will get a better understanding of why the European Union and the single market matter to us. That situation is made clear in my constituency, where Delphi makes the diesel injectors for the engines of 40% or so of heavy trucks manufactured and used in Europe. That is an example of component parts that go towards an end product making a big difference to the economy as a whole.

I move on to trade, and first to EU-US trade. We have to have a relationship between the United States and the European Union that makes sense and promotes trade. Right now, there are far too many tariffs, both the type that we know about and hidden tariffs. We have to end that, and the Prime Minister is absolutely right to talk about doing that. That is why President Obama was helpful to him in pointing out that we may as well fix our relationship before we decide to end it. That is a simple message that we have to consider.

Germany, Italy and usually France trade more than we do with India, China and Brazil, the economies with which we need to develop relationships. We have to pose the question whether leaving the EU would help us overtake the countries that would still be in it, and the answer is no. Instead, we should consider what we can do here to improve our exports rather than worry about having an alibi and a series of excuses. It is what we do here that actually matters. That is why it is important that UK Trade & Investment, for example, is providing the right network of support for small and medium-sized enterprises. We need to ensure that some of our SMEs are big enough to penetrate the markets that I mentioned and have the right skill sets and determination. We need to start emulating Germany’s mittelstand approach to ensure that our firms are big, robust and strategic enough to tackle export markets. If we do that in a way that signifies an intention to improve our export performance, we will succeed, but it will not be because we have abandoned our partners.

Obviously we need to renegotiate our relationship with the EU, because no form of government or system of institutions should remain unchanged and unreformed. The EU is a classic example of that. However, we have to decide what our priorities in those negotiations are and what we need to achieve. For me, it should be increased competition, both within Europe and through Europe being able to compete globally. We are in a global situation, and we cannot start arguing about some sort of family dispute. The reforms have to focus on the global scale and the need to be competitive.

One area that we need to explore is energy, because we need competition and connectivity between energy producers, especially for the benefit of consumers. I would put such topics on the agenda, but we need to reform and be positive, vigorous and confident.