Vicky Young: Well, let’s discuss this and
the wider economic news today. I’m joined by Kit Malthouse who is a member of the Treasury
Select Committee. Just quickly, Amber Rudd, saying it’s unthinkable that there will be
‘No Deal’, that’s not really the Government line is it?
Kit Malthouse: Well the Government wants to avoid ‘No Deal’ if it possibly can. That’s
in both our interests. At the Treasury Select Committee today we had the Governor of the
Bank of England in front of us saying that that was absolutely the case, but because
it would damage the EU. Everybody recognises that it is in our mutual interests to have
an agreement and hopefully that’s what’s going to happen.
Vicky Young: What about those who say that, actually the economic impact of Brexit, the
fact that inflation is so high, because the pound has slumped and imports are higher,
that this is just the beginning of how things are going and its having a negative impact
already. Kit: Well I’m not sure inflation is so high.
It’s just peaking at 3%. Again the Governor indicated to us that this is a temporary blip
up and they think that will start to ameliorate over the next few months, but also those organisations
that are forecasting doom and gloom: the OECD today have said this, these are the very same
organisations that we learnt from bitter experience before the referendum that got it so very
wrong. The OECD in particular forecast a sort of plague of frogs would descend from the
sky or that we’d all break out in boils post referendum and then they’ve been busy revising
their forecasts upwards and even they are saying it’s very difficult to come to any
kind of a conclusion from an economic point of view in the absence of any certainty around
the arrangements, so what I think all of us are keen for and I know more and more continental
European businesses and politicians are keen for now, is for us to talk about everything,
that includes the future relationship. Vicky Young: The OECD’s report is pretty gloomy.
They say that staying in the EU. if we could reverse the referendum result, would boost
the UK economy. And that in a ‘No Deal’ scenario investment would seize up, the pound would
hit new lows and that the UK’s credit rating would be cut.
Kit: To be fair to the OECD, it’s very hard to forecast the performance of an economy
from the outside. As I say, they forecast what was going to happen after the referendum
and then busily scrambled to revise their growth forecasts upwards in the face of a
very strong performance from the economy post referendum. And that’s because three quarters
of economics is psychology. I think what all these international organisations fail to
appreciate is the psychology of the British people. They voted to leave, that means most
people are optimistic about leaving, they’ve now become used to the idea, consumption patterns
are staying broadly where we expected them to be. Investment is okay. Employment is very
high and we are a resilient country and an ingenious country. We know generally in ourselves
that we will find a way to thrive in the future whatever happens.
Vicky Young: What do you think should happen now in the EU negotiations? Does Britain need
to put more money on the table? Kit: No, I think we’ve got this fundamental
problem which is that they want to know what we’re going to pay and we want to know what
we’re buying. And this is always going to be a problem. The EU said right at the start
of this negotiation that ‘nothing is agreed until everything is agreed’, and yet they
won’t talk about everything. Vicky Young: How are they going to move forward?
Kit: I suspect that we will see come Christmas a greater political pressure from those elected
politicians in Europe who will have to live with the consequences of ‘no deal’ to come
and talk about a future trade deal. There’s a lot of action in Geneva where the WTO is
based. We’ve already started to agree our tariff rate quotas which is a critical part
of building an arrangement for the future so I am hopeful that when we get to the turn
of the year, sense will prevail and we can start to put it all together.
Vicky Young: That you very much. Kit Malthouse there of the Treasury Select Committee and
all eyes now towards the end of the week will be on that EU summit where Theresa May and
the British Government will be hoping for some sign from EU leaders.