UK Economy: Post-Referendum Assessment
Debate between Diana Johnson and David Gauke(8 years, 6 months ago)
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Mr Gauke
First, the report is for the next two years. As my right hon. Friend will be aware, even if we vote to the leave the European Union, we will continue to be members of it for those two years as we negotiate our departure. During that two-year period, we would continue to make contributions to the EU budget. May I also point out what the International Monetary Fund has said? It said that, essentially, if the economy shrinks by 1% or more, any fiscal gain from ceasing to make contributions to the EU will be wiped out by lower tax receipts and greater costs. Indeed, under the central scenario set out in the report, the public finances will be £24 billion worse off as a consequence of our leaving the EU.
On interest rates, the assumption in the report is for no changes to fiscal or monetary policy. I point out to my right hon. Friend that one of the predictions in the report is that we would see the pound falling in value and inflation increasing. The Monetary Policy Committee has made it clear that it would have a difficult trade-off to try to get the economy going at a time when there would clearly be a slowdown. At the same time, the pound would be falling and inflation would be rising. In those circumstances, the safest thing to do is to make no assumptions on what monetary policy would be.
Diana Johnson (Kingston upon Hull North) (Lab)
Has any assessment been made of the impact if we leave the EU on 23 June on companies such as Siemens, which invest in new industries in this country such as renewables?
Mr Gauke
The hon. Lady’s point is particularly significant because of the long-term impacts. It is very clear to any of us who engage with those who invest in the UK—businesses that make decisions on where to locate investment—that access to the single market is an important attribute for the UK. It is clear within the report that business investment would fall significantly in both the short and long term as a consequence of leaving the EU.
HMRC and Google (Settlement)
Debate between Diana Johnson and David Gauke(8 years, 10 months ago)
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Mr Gauke
My hon. Friend raises an important point. There is a need for international co-operation at an OECD level, which is the principal focus, and at an EU level. He will be aware of action that the European Commission has taken in respect of other member states that have had concerns about state aid.
Diana Johnson (Kingston upon Hull North) (Lab)
The Minister says that this deal does not amount to a 3% tax rate for Google, so for the sake of public confidence will he say what the actual tax rate is?
Mr Gauke
No—[Laughter.] That is because of taxpayer confidentiality. The point that I was trying to make was that the rate cannot be calculated by looking at profits from sales in the United Kingdom. The tax rate is currently 20%, and that applies to everybody, but the effective tax rate depends on the particular circumstances of any business.