UK Economy: Growth, Inflation and Productivity

Lord Sahota Excerpts

Thursday 29th June 2023 Lords Chamber

[Lord Sahota (Lab)]

My Lords, it is a pleasure to follow my friend the noble Lord, Lord Desai. Earlier, the noble Lord, Lord Griffiths, listed the interest rates for the past 50 years. I may stand corrected, but I think he missed out the one for Black Wednesday.

I thank my noble friend Lord Eatwell for bringing this debate on economy, inflation and productivity to our Chamber. One thing, if anything, that unites all the countries of the world is the economy. Every Government want their citizens to be happy and prosperous and to enjoy the fruits of their labour. Before the Brexit vote, our economy was chugging along reasonably. Growth wise, we were up there with Germany and the US. Our pound had been steady against the dollar for many years. Our exports to the EU were well over 40%. EU migration kept our agriculture and other industries going. EU nurses, care workers and doctors kept our hospitals going. We were never short of a labour force for our economy. Inflation was reasonably under control, and the housing market was doing well on a low interest rate.

Then we had the bombshell of Brexit in 2016. Look at where we are now. Our pound was devalued by 15% from day one of Brexit, and it has never recovered. Our economy is performing well below those of the US and Germany. Our migration and inflation policies are out of control, like some spacecraft out of control in space. Our interest rate is going through the roof, and it will not be long before some house owners start to hand their keys back to their lenders, as they did in the 1980s.

The IMF forecasts that, of the leading G7 economies, ours is the only one that has shrunk. Business investment in the UK is 31% below the pre-referendum trend. The red tape has increased, as has bureaucracy. The UK economy is 5.5% poorer now than it would have been had we stayed in the EU, and our tax revenue would have been £40 billion higher, so do not tell me that all those slogans on the sides of buses were correct.

What is worse is that we sat at the top table of the world’s biggest economic club, and other countries were always trying to catch our eyes to do them a favour. Now, we are the ones trying to catch their eyes, so that we can do a trade deal with them. Our status in the world is not what it used to be, however hard we pretend it is.

However, we are where we are, even though some politicians during the EU referendum were less than honest with our people. I hope people will remember them for their lack of honesty and integrity. As I said, we are where we are, and we have to make the best of Brexit and make sure that it works for the best of our country.

A recent poll shows that people would prefer some sort of closer economic ties with the EU. I hope people will remember that. Next year, I hope there will be a new dawn of a Labour Government, with vigour and energy, to deal with our new challenges, make the best of Brexit and once more restore our status in the world to where it should be: at the top table.