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My Lords, I am most grateful to my noble friend for giving us this opportunity to look at trade from a wider point of view. I should probably declare my interest although I am always confused by it. I was working happily in the building materials industry when suddenly my father died and I was told immediately that I should go to the House of Lords.
I did not know any Lords. I waited to be invited but no one wrote to me. I then realised that I had to prove who I was, which was quite difficult. My father was called Lord Selsdon and I was Malcolm Mitchell-Thomson. I came to the House and met Lord Jellicoe and Lord Shackleton, who became two of my great heroes. I was then made to give up my job in the manufacturing sector and go into economic consultancy—although I was not good enough—dealing with trade. Then Lord Shackleton grabbed me and said, “I would like you to be involved with my East European Trade Council because things are going to happen over a long period of time and by the time that things do happen that are beneficial for the United Kingdom I will probably be dead, but you will still be alive”. At the same time, Lord Jellicoe said to me, “You are joining an economic consultancy company. I am sure they will let you take time off in the afternoon as long as you work at weekends”. I was to deal with export and trade finance.
Our first clients were the Japanese, who wanted to know about motor cars. Somehow, I did not believe that the Japanese made motor cars or were any good at that. We did a research project for them on opportunities in the United Kingdom automotive market. I did not know that one of the main reasons for this was that they drove on the same side of the road as we did. That led in due course not so much to the marketing of Japanese cars but to looking at what products and services they could sell to the automotive industry. Later, we organised a trade mission to Japan and
Bentleys and Rolls-Royces arrived there. I did not believe that the Japanese would drive those cars. The manufacturers sent left-hand drive cars by mistake, so we had to explain to the Japanese that, if you were a gentleman, you could drive your own Bentley as well as having a chauffeur, but that if you had a Rolls-Royce, you must have a chauffeur, and having a left-hand drive car meant that the chauffeur could open the door on to the pavement and help the customer. These were little things but I watched the Japanese logically and seriously develop and expand this area over time. The automotive sector has done extremely well. My own interest in it is that my father spent his life motor racing, but that is another story.
From there I moved on to do trade research. I was put on the East European Trade Council and then one day I met a charming lady called Patience Wheatcroft—now the noble Baroness, Lady Wheatcroft. She interviewed me and more or less took me apart by asking me questions which I had no idea how to answer, but I continued on the trade front. Then Lord Jellicoe said to me, “We are going to put you on to this European lark. We will put you on the Council of Europe”. I was not quite sure what that was. However, he continued, “Ask your employers to let you take some time off and you can go and see what we can do with Claude Chaisson’s money and develop opportunities in Africa using the European Development Fund”. Before I knew it, I was shoved into an aeroplane with His Royal Highness the Duke of Kent, Lord Jellicoe and others, and off we went to explore the French territories. I have to say that I did not know where the French territories were, nor did I know the historic relationship. So we were going down the west coast of France and almost not realising where we were, but it was a great experience.
I found something that worries me today. I received from the Office for National Statistics a release of
“The current account deficit widened in Q3 2014, to 6.0% of nominal Gross Domestic Product GDP, representing the joint largest deficit since Office for National Statistics … records began in 1955”.
I am not sure that things are as bad as that makes out. We may indeed have a current account deficit. In general, our biggest trade deficits have been with Germany, China, Norway, the Netherlands, Hong Kong, Italy, Japan, France, Benelux, Canada, Russia and Turkey. Our surpluses, surprisingly, have been with Ireland, the United States and, in general, Middle East countries. It is a difficult thing to look at because one thing that has happened in the internationalisation of the United Kingdom in recent years is that we have had a high level of immigration and of people from overseas countries wanting to work and contribute to the UK economy. We have probably the best international relations of any nation. I refer again to the situation relating to the Commonwealth—a remarkable collection of nations which are coming together, but we do not have any trade surpluses with them.
As I said, our two greatest trade surpluses are with Ireland and the United States. I find that quite interesting. Can we finance a trade deficit? Are we going to have trade surpluses? With which countries should we or could we operate? I return always to a map of the world. Historically, we have no raw materials or resources other than coal. Everything that we got came from overseas countries, where we managed to create added value. At the moment, the deficit that we have on manufactures can perhaps easily be supported by income flows. The Office for National Statistics document stated that there was also a record deficit in 2014 of 2.8% of nominal GDP,
“a figure that can be primarily attributed to a fall in UK residents’ earnings from investment abroad”—
I had forgotten about the earnings from investment abroad that was so significant to our economy—
“and broadly stable foreign resident earnings on their investments in the UK”.
Perhaps the Government can give us some idea of what the foreign residents’ investments are in the United Kingdom at present, and how significant they are to the economy.
Over my years in trade finance, I have never been quite as confident as I am now. I realise that I was completely wrong to feel negative about the balance of payments and trade of this sort. We are, without doubt, the world’s most favoured country—regardless of how, why and when we got there. It seems that interest in the United Kingdom—whether it be for education, training or security—is considerable. I congratulate those who have spoken today and am very grateful if somehow from this debate we can give increased confidence in the United Kingdom.