EU Membership: Economic Benefits

Nick Clegg Excerpts

Wednesday 15th June 2016 Commons Chamber

[Mr Nick Clegg (Sheffield, Hallam) (LD)]

I am grateful to be following the right hon. Member for Wokingham (John Redwood) because he is widely considered to be one of the more erudite spokesmen for the Brexit campaign. I waited with bated breath for a cogent, coherent and practical economic analysis of why Britain’s economy would thrive out of the single market. Instead we got this curious mix of fantasy and naivety, which I never thought I would hear expressed in such a way.

I would like to make three points. First, the right hon. Gentleman’s diagnosis of the British economy and its relationship to its European economic hinterland is based on a backward-looking view that belongs to an era of gunboat diplomacy, tariff wars and 19th-century economic rivalry. As Margaret Thatcher and Lord Cockfield, the inventor of the single market, recognised, modern trade is not about taxes, levies and tariffs; it is about the rules, the standards, the norms, the qualifications and the regulations that assist or impede trade. What possible control would we gain by being outside the room in which those rules are made but none the less, as the right hon. Gentleman has just admitted, abiding by them? That would be a catastrophic loss of sovereignty and control.

[Sir William Cash]

As usual, the right hon. Gentleman is off beam. He is completely incapable of getting anything on the European Union right. Decisions are taken in the Council of Ministers, as he well knows, largely behind closed doors by COREPER. Those decisions are not made in the manner he suggests.

[Mr Clegg]

Being called “off beam” by the hon. Gentleman is quite something. He and I share a passion for Sheffield, however, so I shall put that aside for a minute. In the economy of this country, 78% of GDP is generated by services. Services are barely affected by taxes, tariffs and levies, but British lawyers, British engineers, British architects and British creative industries trying to sell their wares, as they successfully do—we are a services economy superpower in Europe—are affected by precisely the rules that are thrashed out in Brussels, in discussions that we would be excluded from if we left the European Union.

As the right hon. Member for Wokingham acknowledged, the completion of the single market in services is, indeed, a work in progress. We are the chief author and architect of the success in that area. Why on earth would anyone walk away from the construction of a building of which they were the chief architect and the chief beneficiary? A 7% increase in our GDP is the calculated improvement in the economic performance of this country if we complete the single market in services, but the Brexit camp want to walk away from that.

[John Redwood]

Why was there no improvement in manufacturing activity with the single market?

[Mr Clegg]

Dare I say it, but even by the fairly specious standard of the statistics bandied about by both sides in this campaign, the way the right hon. Gentleman used statistics was spectacularly misleading. From listening to the Brexit campaign, people would think that the club we have been a member of for 43 years has been the fount of all misery. How come we are still an independent, free and broadly speaking prosperous nation if we have been a member of it for over four decades? I simply think that that applies to his example.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Will the right hon. Gentleman give way?

--- Later in debate ---

[Mr Clegg]

I will, if I may, make a little progress.

The second point, which is completely omitted by the analysis of Brexit campaigners, is our current account deficit. To be fair, the Government are very silent on that as well, for the very good reason that it is shockingly large. We now have a current account deficit which, at 7% of GDP, is historically and internationally very high and, in my view, unsustainable by historical standards in the long run. As the Governor of the Bank of England has said, if a country runs such a huge, unprecedented current deficit, it has to rely, as he put it, on the “kindness of strangers”.

[James Cartlidge]

Will the right hon. Gentleman give way?

[Mr Clegg]

If I may finish this point, I will then give way.

The only way in which that current account deficit is sustainable is if strangers from elsewhere in the world invest in assets in this country—in property, infrastructure, the financial services sector, factories and companies. It is on those investors, and on the kindness of those strangers, as Mark Carney has said, that the sustainability of the ballooning current account deficit relies. What will those strangers think after next Thursday, when they do not even know whether our country will survive at all? The United Kingdom may not persist because Scotland may trigger a second referendum, and see the United Kingdom fall.

[Ian Blackford]

Will the right hon. Gentleman give way?

[Mr Clegg]

May I just finish this point?

What will those strangers say as they see year after year of grinding political, constitutional and economic uncertainty? Why would they continue to invest in UK plc? And if they suddenly pull out their money, I tell you what will happen: the pound will plummet; inflation and prices for ordinary people will go up; and we will be caught in an economic whirlwind that, irresponsibly, these people want to inflict on millions of our citizens. It is a scandalous position to take.

[Ian Blackford]

The right hon. Gentleman is making some very powerful points. May I remind the House that we are still living with the consequences of the financial crisis in 2007 and 2008? We have the answer to the question he is asking: the stock market has fallen by £80 billion in the past few days as investors recognise the risk to this country if we have a Brexit vote next week. That is the start of the tsunami that he is talking about. Why would we risk the prosperity of the United Kingdom and, indeed, of Europe by taking such a rash action?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Interventions must be short to give everybody a chance to speak.

[Mr Clegg]

I played a role, somewhat thanklessly as it turned out, for five years in the coalition Government—as did my party, although it is not abundantly represented today on the Bench next to me—to try and provide the political stability that the country needed to recover from the cardiac arrest that occurred in 2008. I think it was the right thing to do. A country cannot recover from that kind of trauma if there is constant constitutional and political instability, yet that is what the Brexit camp want wilfully to inflict on this place and on this country. It is astonishing that they want to drag us back into the furnace of that economic disaster from which we are still escaping right now.

My third and final point is that, unlike, I think, every other Member of the House, I actually worked in a relatively lowly manner—in a previous incarnation, before I went into politics—as an international trade negotiator. I was part of the EU trade negotiation team that sought to settle the terms of China’s accession to the World Trade Organisation. I spent months haggling with hard-nosed Russian trade negotiators about the overflight rights paid by British Airways and European airlines for flying over Siberia. I have spent a lot of time with a lot of international trade negotiators, and I know that they are very unsentimental folk. It is almost laughable simply to state it, but the idea is that we could pull out of the world’s largest economic bloc and then say to these unsentimental folk, who have driven such a hard bargain with that bloc of 500 million people, that we want not just the same but better deals and a better set of conditions on behalf of an economy of only 60 million people. Who do the Brexit camp think these negotiators are? They are not stupid or naive: they will just snigger.

I have looked in vain—I scoured the internet this morning—for the apparently many freedom-loving nations that will cut such favourable deals with us as we depart into this world of milk and honey in which, effortlessly, people will give us concessions that they did not give to a bloc of 500 million people. Can we find anyone? Have the Indians said, “Yes, sure, we’ll give you what you want”? Have the Americans, Canadians or Australians said that? Has anyone said it? Not a single country anywhere in the world has said that it will give better terms of trade to the United Kingdom on its own than to the European Union.

So please, if we do one thing between now and next Thursday, by all means let us thrash it out between those who want us to remain in the European Union, flawed though it is and reformed though it must be, and those who want us to go out, but let us not do so on the basis of these falsehoods, this misleading nonsense, this naivety and fantasy, which would do this great country of ours such a terrible disservice.