Select Committee on Treasury Fourteenth Report


1. Globalisation is more relevant to the United Kingdom's economy and public policy now than ever before. Globalisation is having a significant impact on the United Kingdom's economy, and this poses a range of policy challenges for the Government if it is to maximise the chances that the gains of globalisation for the United Kingdom will continue to outweigh the losses. In March 2006, we announced an inquiry with the title Globalisation and its impact on the real economy.[1] We referred to the "real economy" in the title of our inquiry to encourage evidence on the impact on businesses and households rather than a concentration on capital flows through the City of London. In this inquiry we sought to build upon the work begun by the Treasury Committee in the last Parliament on the economic impact of China,[2] and our own Report entitled Globalisation: the role of the IMF, which was published in July 2006,[3] as well as our continuing scrutiny of the United Kingdom economy in Reports on Budgets and Pre-Budget Reports.[4] We held six oral evidence sessions between June 2006 and May 2007, taking oral evidence from economic commentators and observers, including Professor Amartya Sen of Harvard University,[5] from representatives of business organisations[6] and trade unions,[7] and from Friends of the Earth. We concluded our inquiry by taking evidence from Sir Martin Sorrell, Chief Executive Officer of WPP Group. We have also drawn upon oral evidence given by the Rt Hon Gordon Brown MP, the then Chancellor of the Exchequer, during our inquiries into Budgets and Pre-Budget Reports and into the Monetary Policy Committee of the Bank of England: ten years on. We have received a range of written evidence as part of this inquiry, all of which is published with this Report.

2. During this inquiry we visited Dubai in the United Arab Emirates and Delhi and Mumbai in India. This gave us the opportunity to see at first-hand how globalisation is affecting emerging economies and how those countries perceive the role of the United Kingdom in the context of globalisation. We have also benefited from insights gained during our more recent visit to Ottawa and Washington DC and from an informal meeting which took place between Professor Joseph Stiglitz of Columbia Business School and the Chairman of the Committee. We are grateful to all those who have assisted us in our inquiry.

3. We have received evidence on a vast range of topics. In this Report, we concentrate on the evidence on economic issues and then seek to identify the main policy issues arising specifically in an economic context. We do not make firm recommendations about Government actions in particular areas. We do not purport to explore in great detail either the important social dimensions of the debate on globalisation or the crucial environmental implications of globalisation. Some of the environmental dimension of globalisation will be examined when we report separately on Climate change and the Stern review: the implications for HM Treasury policy on tax and the environment.

1   Treasury Committee, Press Notice no. 30 of Session 2005-06, 29 March 2006 Back

2   Treasury Committee, Oral and Written Evidence, Impact of China on the world and UK economy, HC (2004-05) 314-i and ii. The then Committee's inquiry was not completed due to the dissolution of Parliament in April 2005. Back

3   Treasury Committee, Ninth Report of Session 2005-06, Globalisation: the role of the IMF, HC 875 Back

4   Treasury Committee, Second Report of Session 2005-06, The 2005 Pre-Budget Report, HC 739; Treasury Committee, Fourth Report of Session 2005-06, The 2006 Budget, HC 994-I; Treasury Committee, Second Report of Session 2006-07, The 2006 Pre-Budget Report, HC 115; Treasury Committee, Fifth Report of Session 2006-07, The 2007 Budget, HC 389-I Back

5   As well as Ms Bridget Rosewell, Consultant Chief Economist, GLA Economics, Mr Stephen King, Group Chief Economist, HSBC Bank plc, Mr Martin Wolf, Associate Editor and Chief Economics Commentator, The Financial Times, and author of Why Globalisation Works, Mr Peter Oppenheimer, Goldman Sachs, Mr Jens Tholstrup, Oxford Analytica, Mr John Hawksworth PricewaterhouseCoopers, and Professor Eric Neumayer, London School of Economics and Political Science. Back

6   Sir George Cox, Chairman, The Design Council, and Mr Stephen Radley, Chief Economist, EEF. Back

7   Mr Richard Exell, Senior Policy Officer, Trades Union Congress, Mr Simon Dubbins, Head of International, Amicus, and Nick Clark, Policy Officer, Public and Commercial Services Union. Back

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Prepared 16 October 2007