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There are multiple further questions, but I will leave them just now, in the interests of time.

My question is for Professor Chadha and it picks up on the Brexit point. I am on the Finance and Public Administration Committee and we had representatives of the Office for Budget Responsibility in yesterday. The OBR commented on Brexit in its economic and fiscal outlook report of November 2022, in which it said that Brexit had had “a significant adverse impact”, and it quoted various statistics about trade volumes falling 8.3 per cent below the present level by quarter 4 of 2023.

The OBR also made an interesting comment about trade intensity being

“15 per cent lower ... than if the UK had remained in the EU.”

Trade intensity is a measure of a country’s interaction with the world economy. I asked what the outlook was for that to continue, and they said that they anticipate that that will continue for at least another 15 years, despite the trade deals that have been done. Are you aware of those figures, and do you have any further reflections on the outlook as outlined in the OBR’s comments to committee yesterday?

Because I am aware of the time—and I appreciate the witnesses giving up their time—I will direct my final question to Professor Chadha only.

In talking about uncertainty, we talked about how to disaggregate data—Emma Congreve touched on that. Arguably, however, the past is a good predictor of the future. Given that the session is an overview of the current macroeconomic climate, it is worth pointing out some of the statistics about the UK. In 1999, only four of the 12 small advanced economies had a GDP per capita higher than the UK; by 2019, the figure was 11 out of 12. Even since the economic crisis, if the UK had matched the economic growth rates of other large economies, its economy would have been 4.4 per cent larger; if it had matched the growth rates of small advanced economies, its economy would have been 7.7 percent larger. We have considerable certainty, because we can look at the past.

Given those economic stats, to what extent can we be certain of continued decline—if the past is a good predictor of the future—and to what extent is our economy a “hipster” economy or otherwise?

Thank you for putting that on the record. I commented at the beginning that we had talked about that issue, and I understand and appreciate the difficulty in disaggregating data on the impact of Covid, the pandemic and Ukraine.

That said, we are now able to predict with slightly more certainty the impact of Brexit over the long term. Do you think that that issue is being talked about enough? Obviously, I have read your November report, but the issue keeps disappearing as though it is not going to have any long-term impact when, according to your figures, it quite clearly will have.

I saw that, too. It is an interesting area to look at, because it relates to the skills agenda as well as, for example, labour shortages.

Another question that I have is more about the scope of the OBR’s approach to the sustainability of public finances. The convener mentioned the removal of the Office of Tax Simplification; one area that I often like to ask about—indeed, I asked the IFS about it last week—is the cost to the UK’s GDP of money laundering and corruption. It is an absolutely significant factor, because it runs into billions every year.

I am not entirely sure whether the OBR has started to make an assessment of that, but it has a real cost. I was just wondering where issues such as the effect on the sustainability of public finances of this sort of cost to UK GDP fit within your organisation. Where in your organisation would you consider the implications of that, if at all?

Thank you for that. I appreciate the complexity of the matter and your role in all of this, but it strikes me that the issue must at least be approaching that tipping point where it becomes of interest from a public finance point of view.

Good morning and thank you for attending. I want to ask about a totally different matter that has not yet come up this morning—the B-word, or Brexit. I note your comment in November’s economic and fiscal outlook that

“Brexit has had a significant adverse impact”,

with trade volumes declining. Indeed, they are to fall by 8.3 per cent below the present level by quarter 4 in 2023.

An area that I find very interesting is trade intensity, which you say is

“15 per cent lower ... than if the UK had remained in the EU.”

My understanding is that trade intensity is a measure of a country’s integration with the world economy. Given that we will not be able to replicate what we had with the fairly paltry and thin-gruel deals that have been made thus far, can you say anything about the prospect of trade intensity increasing or, indeed, maintaining the percentage that you set out in your report over the next five years and beyond? It would be useful to hear an answer to that question from whoever is best placed to give us one.

Would you consider taking an explicit look at that? I am thinking, for example, of the proposal to remove the Office of Tax Simplification, despite the fact that, as we know, it is the complexity of tax codes that provides the wriggle room in a variety of areas. We also know from the National Crime Agency and Transparency International—although the latter’s figure is an estimate—that we are talking about a loss to UK GDP of approximately £267 billion each year, and the effects of that will flow through in the availability of public finance for doctors, nurses, teachers and so on.

You do not need to answer this just now, but you might consider looking at that explicitly, because it is a very real issue that could ultimately have quite a significant impact on the sustainability of our public finances. If it is “implicit”, as you have said, it is not overtly understood, and it is overt understanding that will drive action. Any comment on that would be helpful—or you could just tell me that I am wrong.

Yes, and we need to match ambition with financial enablement.

Good morning, minister. Thank you for attending the committee today.

Before I ask my questions, I want to take this up a level. A multitude of figures are being bandied about on exactly how much finance is required to enable the just transition and the changes that we need to make. The figures are quite eye watering, and it is generally agreed that, globally, we are nowhere near that amount.

However, in the Scottish context, the Climate Change Committee report points out that many relevant powers that are related to areas such as funding, finance and product standards are reserved. Therefore, my question to you is this: are you getting the support that you need from the UK Government in supplying that level of funding, or are you having to take that out of the fixed Scottish budget, which obviously has nearside time parameters in terms of planning? How is the funding that you are able to realise being managed and actualised?