Sterling: Euro Exchange Rate

Lord Brooke of Alverthorpe Excerpts

Monday 9th October 2017 Lords Chamber

[Lord Bates]

I acknowledge the noble Lord’s great professional experience in economics, but I am saying something slightly different. I am not saying that we do not pay attention to that and do not watch it at all; I am saying that the way in which it has been configured, through successive Governments, is such that this is a matter for the Monetary Policy Committee of the Bank of England to respond to. Where inflation rises above 3%—its target is 2%—it has to respond. Where it sees matters which are causing concern, it can choose to cut interest rates—as it did after the referendum, to historically low levels of 0.25%. We are not saying that we do not have any policy; we are saying that we have a core set of policies which the Government are responsible for and we are acting on them.

[Lord Brooke of Alverthorpe (Lab)]

Will the Minister explain to the House why we have been downrated?

[Lord Bates]

If someone wants a historical lesson on the accuracy of the ratings agencies in making predictions, the events of 2008-09 might raise some question as to what they were doing then. We are talking about a downgrade of one notch. That reflects some concerns that they have about the transition period as we exit the European Union. They are perfectly entitled to say that. We are saying that we have a clear plan as to how we want that exit to happen, we want it to happen as soon as possible and we believe that the prospects for this country thereafter are very positive indeed.