Queen’s Speech — House of Lords, 2022-05-16
Topic: Macroeconomics
Questions: 2050—I am just 100 years out. Even if we get to that, a lot of countries in the world will not. Two things follow from that. The first is that climate change will not be significantly improved. We in this country produce 1% of the world’s emissions, so if we have all the struggles and make the vast expenditures but other countries do not, we will not have achieved anything so far as climate change is concerned Secondly, if we have spent an enormous amount of money improving our electricity and getting it all done, our electricity will almost certainly be more expensive than it is in other countries. There is a danger we have to watch, as the heavy industrial users of electricity will build their factories in other countries, not in those that have spent all that money on this. We have the time to deal with this, but we have to be very careful that that is not the end result of what we do.
Edward Timothy Razzall (Liberal Democrats, Centre to centre-left): My Lords, as many noble Lords have said, the UK economy is clearly in difficulties. In economic terms, growth in GDP is stagnant. GDP even reduced in March. Inflation is forecast by the Bank of England to reach 10% and, notwithstanding recent gloating by Brexiters, it is now clear that our growth rate will be lower than in all other G7 countries. In personal terms, the increase in the cost of living has driven millions into food and fuel poverty and, whatever the Prime Minister has told the Daily Mail, we may be heading for a recession Obviously, many factors are not the Government’s fault—the pandemic and its aftereffects, the increase in world energy costs, and the war in Ukraine and its international effects—but one factor is entirely the fault of a Government who are run by a Tory party that most people now regard as the Brexit party. It is the effect of Brexit on which I wish to concentrate my remarks. The numbers are stark. The OBR has confirmed that Brexit will reduce our GDP by 4% per annum, significantly more than the effect of the pandemic. Investment reveals the same disaster. Between 2017 and 2020, foreign investment was at the lowest levels since the 1980s. The NGO UK in a Changing Britain calculates that Brexit has pushed our food prices alone up by 6%, and the exodus of EU workers has led to record job vacancies that will soon drive the growth in inflation. However, the greatest disaster has been the impact of Brexit on trade. As Simon Nixon said in the Times last week: "Six years after the referendum, no one has yet been able to identify any rational alternative to integration with Britain’s closest trading partners." On the Government’s own admission, the recent Australia and New Zealand trade deals will have no significant economic impact Trade is vital for our economic growth. In January the trade deficits were the biggest on record: £26.5 billion for goods and £16.2 billion for goods and services. All G7 countries except the UK have seen growth in trade as a proportion of GDP since 2020, and the UK is down even from that low point. The OBR says that there will be a 15% drop in our trade as a proportion of our GDP and that our new trade deals since Brexit will compensate for only a tiny fraction of our losses from Brexit So the most effective action by the Government to ease the cost of living crisis would be to ease barriers to trade caused by Brexit. New trade barriers cause a significant supply side shock, with customs checks, rules of origin requirements and phytosanitary measures for trade in animals and plants, let alone the need for regulatory compliance with each jurisdiction separately. Of course, the Government want British-only regulation and safety certification of industries, but does it really make sense, for example, for the chemical industry to pay for distinct British registration when it already pays for the EU gold standard What do we have for the Government? Egged on by the noble Lord, Lord Frost, who I see is not in his place, they seem to want to tear up the Northern Ireland protocol—which, whatever the Attorney-General says, must be in breach of international law. This is intentional Russian roulette that risks the suspension of our trade agreement with the EU and the supply shock that would result. The gracious Speech provides for a Brexit freedom Bill, giving the Government the power to rewrite rules with minimum parliamentary scrutiny—are we surprised by that?—with no indication of the rules that will be rewritten However, do we have the beginning of an admission from the Government that Brexit is not working? Mr Rees-Mogg has announced a delay to the introduction of border checks, admitting that their enforcement would be an act of self-harm. This means costly checks for exporting UK farmers, while exporting European farmers have no such hassle. But it is a recognition that putting up barriers makes food more expensive for consumers, as we remainers always said. We also have the Chancellor of the Exchequer admitting to the Treasury Committee in another place that Brexit is inhibiting UK trade. Of course, the Prime Minister will not accept this, telling the Liaison Committee that it is a matter of exporters not trying hard enough. Whatever the noble Lord, Lord Forsyth, said earlier about her, the Prime Minister should listen to Swati Dhingra, the new member of the Bank of England’s Monetary Policy Committee, who says that Brexit is costing every citizen up to £1,000 per year. I know that the noble Lord, Lord Callanan, will not agree, but will the Government listen and take appropriate action to modify the disastrous impact of Brexit?