Brexit: Bank of England Report

Lord Howell of Guildford Excerpts

Thursday 29th November 2018 Lords Chamber

[Lord Bates]

The noble Lord is absolutely right: the Bank of England has a statutory duty to inform its own analysis and to look at the worst-case outcomes to ensure that the economy is resilient to meet them. That is for the Financial Policy Committee and the Monetary Policy Committee to undertake, and they do so routinely. What is different about this analysis is that it was prepared at the request of the Treasury Committee in another place to inform the wider debate that it will have. Next week, the committee is taking evidence from the Chancellor of the Exchequer, and that will all be thoroughly debated ahead of the vote on 11 December.

[Lord Howell of Guildford (Con)]

My Lords, I greatly admire the economic acumen of the noble Baroness, Lady Kramer, and I agree that these long-term projections for GDP are a bit scary—but they are probably not very accurate. However, is she not, along with many other people, confusing the narrow and misleading measure of GDP with the real drivers of our welfare and prosperity? Does my noble friend agree that many economists today realise that, to measure our welfare and prosperity, we have to look at much wider factors that assess our national dynamism and innovation? Economists today are facing an economics revolution, and are putting in its place the wrong-headedness of focusing just on the old GDP figure, which frankly belongs to another age.

[Lord Bates]

We do indeed need to look at a range of figures. The most reliable measure is what business is doing. Businesses are hiring people, which is why we have record levels of employment; businesses are exporting, which is why we have record levels of exports; and businesses from overseas are investing in Britain, which is why we have the largest stock of FDI in Europe. That is the true evidence that we need to look at.