My Lords, it is a pleasure to follow my noble friend Lord Brennan; the whole House will have appreciated his profound insight. The noble Lord, Lord Lloyd-Webber, made a most compelling speech about European Union cohesion which I and most other Members will have wholeheartedly endorsed. I draw attention to my entries in the register of interests.
I have always been against joining the European single currency and have campaigned against it. Nevertheless, I very much support our continuing membership of the European Union on the terms negotiated by the Prime Minister. The referendum was held at a particularly inauspicious time. The Government’s accumulated debt is in excess of £1.5 trillion, which is over 80% of our GDP. The annual deficit, although hitherto falling, was £74.9 billion in the year to March 2016. Our current account deficit continues to run dangerously high. In the past we have funded this with foreign direct investment, some of which is both volatile and capable of being moved extremely fast. As the Governor of the Bank of England said during the referendum campaign, we rely on the kindness of strangers.
Despite the referendum result and the downgrading by the rating agencies, it appears that government 10-year bonds can still be sold at a coupon of less than 1%. The Chancellor has abandoned the fiscal squeeze and the Governor of the Bank of England has stated that he will take all necessary actions to protect the economy. We are still creditworthy, but I suspect that if we serve an Article 50 notice, market sentiment will change. Before the referendum and probably as a result of the impending referendum, the economy was showing signs of slowing down. Since the result, and from my experience and discussions with business people, it appears that the slowdown is gathering pace. Deals are falling through or are being renegotiated, and I would draw the attention of the House to reports in last weekend’s Financial Times of major City of London property deals which since the result have now fallen through.
Asset prices, particularly real property, often provide the underlying security for much lending to small and medium-sized businesses and companies. Currently it is extremely difficult if not impossible to fix a value for real property, except perhaps at a vastly discounted price. This is a dangerous situation and I am endeavouring personally to advise borrowers, lenders and other commercial businesses against the backdrop of these very difficult conditions. There are reports of many companies freezing their recruitment, and in some cases unfortunately there have been job losses. The evidence for these reports will start to come through in August when the July figures are published. I hope that the Bank of England and the Treasury will monitor closely the effects of Brexit on our small and medium-sized enterprises, which are the bedrock of our economy and provide so much employment for our fellow citizens.
We are not alone in Europe in having a crisis of confidence in globalisation and to some extent in the institutions of the European Union. Support for the national front in France is rising in the polls, as is support for the AFD in Germany. Elections are being held in both countries next year. The United Kingdom is the second largest economy in the European Union and is important to the Union. Italy is facing major problems with its banking industry. All the foregoing should act as incentives for the European Union, with the United Kingdom, to negotiate some changes, perhaps even changes in freedom of movement.
The noble Lord, Lord Lawson, gave us his plan of what Brexit entails. He was quite clear that we should not bother to endeavour to negotiate access to the single market because this would entail us allowing freedom of movement for EU citizens. It really is a great shame that this prospectus was not put to the British people before
I much regret the decision to leave the EU. We are part of Europe and part of European civilisation. In an increasingly interconnected world, it is a dreadful mistake culturally, economically, educationally and for many other reasons for us to abandon the European Union. It will cause damage and hardship to us all, especially the younger generations who voted in such large numbers to remain.