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Brexit: Economic Effect

Volume 793: debated on Thursday 18 October 2018


Asked by

To ask Her Majesty’s Government, further to their assessments of the economic impact of Brexit made available in February, what analysis they have made of the economic effect of Brexit on (1) North East England, (2) other regions of England, and (3) Scotland, Wales and Northern Ireland.

My Lords, we have committed to ensure that Parliament is presented with the appropriate analysis to make an informed decision when we bring forward the vote on a final deal. At this stage of the negotiation it would not be practical or appropriate to set out the details of exactly how the Government will analyse that final deal.

My Lords, when I last raised this question about the impact assessments and the huge concern that there had been among businesses in the north-east about them, the noble Lord, Lord Callanan, said that further analyses would be undertaken and completed by the time a deal with Brussels had been finalised. Can the Minister give the House and Parliament an assurance that those final impact assessments will be made available both to parliamentarians and to the public so that the economic consequences for our nations and regions can be taken fully into account before any votes are taken in Parliament on this issue?

I am very happy to reiterate that commitment which was given to ensure that, before the meaningful vote—and, indeed, the debate in your Lordships’ House—takes place, there will be an appropriate level of analysis to look at the consequences of the deal. Of course, we cannot set that out in detail now, because we do not know what the shape of that deal will be, but when it comes, that analysis will be made so that people can make an informed decision.

My Lords, given that the Treasury model for short-term forecasting has been right for only one quarter since the referendum, and that the Chancellor has indicated that it is defective, what faith can we put in any long-term forecast, and why does the Treasury believe that its long-term forecasts are likely to be any more accurate than its short-term forecasts?

My noble friend raises an interesting point. When we look at the actual economic data rather than the forecast, we see: unemployment falling to record low levels; inflation and the deficit on the way down; employment on the way up; wage increases at their highest level for a decade; and exports increasing. All this points to the fact that, as with all forecasts, these are not targets to be met but something to be beaten.

My Lords, is it not the case, and does not the record show, that the north-east of England was one of the largest beneficiaries of Japanese inward investment exactly because the Japanese wanted to be in the UK because the UK was a member of the European Union? We know from statements by the Japanese ambassador and Japanese industrialists that decisions about investment in the UK have now been put on hold. Does the Minister anticipate that, whatever the decision and outcome of the negotiations, Japanese inward investment in the UK will continue as before as though nothing had changed?

Certainly the evidence, though not specifically on Japanese inward investment, is that inward investment has been rising since 2015. I know how crucially important inward investment and exports are to the north-east of England. Those of us from that region were immensely proud to be one of the only net-exporting regions of the country. It is a very important element, but exports are continuing to rise and foreign direct investment is continuing to be made into the United Kingdom, up some 16% since 2015. We believe it is in both our EU friends’ interests and, of course, our own that there is a proper deal so that this can continue and unemployment in the north-east can continue to fall.

My Lords, given what we already know about the potential severe impacts on the north-east, would not the honourable and honest position be, when we know what the deal is or whether there is a deal, to say, “This will cost in terms of jobs and prosperity in the future. If you want us to go ahead with it, we will need your explicit consent in another referendum”?

There has been a referendum, which was endorsed by the votes cast in the general election that took place just last year—over 580 Members of the other place out of 650 stood on a manifesto to implement the decision taken in the referendum. We are now in the position of seeking to implement the decision that was taken in the referendum and endorsed in the general election.

My Lords, I declare an interest as chairman of the Cumbria Local Enterprise Partnership. We are now being asked regularly by businesses large and small about what the Government think the impact of Brexit will be on Cumbria. They want to know this to start planning for the post-Brexit era. It seems both ignoble from the Government’s perspective and very unhelpful from the perspective of businesses, which will be so important in the future, to have so little to say and to say it so vaguely.

I do not accept my noble friend’s view that we have had little to say. I was in the Chamber earlier this week when the Leader of the House repeated the Prime Minister’s Statement and some people suggested we had too much too say. Some 106 technical notes have been put out, and we have had significant debates. The crucial thing is that businesses have known since the referendum took place, and certainly since the general election, what the outcome of the referendum was and the Government’s intention in implementing the outcome of that referendum. As a result, they have done incredible work in boosting their exports around the world. We are seeing that export growth is at record levels in terms of goods and that the fastest growth for those markets is in countries outside the European Union, such as India and China.

My Lords, the Minister knows that the north-east’s average disposable income is only three-quarters of the national average. That is why my noble friend has raised this issue at this point. The Minister’s reply that we will hear the Government’s analysis before the crucial vote gives no indication of just how much time there will be for it to be compiled and to be analysed by this House and the other House before the meaningful vote. He must recognise that there are great anxieties about the present situation, and the Government are doing nothing to give any reassurance.

I accept that there will be anxieties, but we have to point to the hard facts: businesses are still coming here and people are still buying British goods in greater quantities than ever before. Furthermore, it is an incredible achievement that last year unemployment in the north-east fell faster than in any other region in the country. It is now lower in the north-east than in London or the West Midlands—something that we have never seen in our lifetime. Therefore, there is a lot for people in the north-east and in Britain to be confident about in the future.