Peter Hargreaves: why business needs Brexit

Don’t listen to the big cheeses: Britain would thrive outside the European Union, Peter Hargreaves tells Merryn Somerset Webb.

Don't listen to the big cheeses: Britain would thrive outside the European Union,Peter Hargreaves tells Merryn Somerset Webb.

When you think of Hargreaves Lansdown, what do you think? You think of the market leader an online stockbroker and wealth manager that steals the cheese of every other player. You might carp at their pricing, but you can't deny that they're good at what they do. What you might not think about is how stunningly disruptive Hargreaves Lansdown was only a matter of decades ago. All those people who used to drive around the UK in flash cars and sharp suits, selling investment products with a 6% upfront commission?

All but gone now in large part down to the way co-founder Peter Hargreaves and his West Country upstarts barged in with a pile of new ideas on how investing should work (and who should make the money out of it). Hargreaves is proud of their achievement. He can, he says, think of no one else who has "ever created a FTSE 100 company in their lifetime without borrowing".

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It has all made Hargreaves (and the Lansdown part of the partnership) a proper fortune. What is he doing with it, now he is no longer an employee or director there? He's out and about disrupting again. Hargreaves is one of the big names in financial services calling for Brexit. When I spoke to him a few weeks ago, he was about to send eight million letters out to UK homes, urging them to vote his way and trying to lay out the arguments without any "jingoistic nonsense".

Why is it this important to him? It's partly sovereignty "we can't get rid of EU commissioners" in the same way we can our own governments. But the two things that bother him most are the regulatory burden of the EU and the monetary cost. None of the academics and politicians so keen to stay in have to deal with the regulations chucked out by the EU. They "haven't a clue" about how it slows us all down. Don't the heads of big companies have to deal with it? Not really, he says.

That stuff is "about five management levels below" the big cheeses. And regulation could work for them anyway: it's hard for new companies to penetrate the moat of regulation to disrupt markets inside the EU. As for all the organisations backing "remain", most receive funds from the EU, says Hargreaves. So it's hard to be sure of any kind of neutrality from most.

On to the cost the £13bn a year we pay out to the EU (post-rebate, but before any money we get back) makes up a big chunk of our deficit. If "George Osborne had that in the kitty" the UK's fiscal situation wouldn't look so bad. Surely, Iask, we would still spend the money subsidies to farmers won't vanish on 23 June, will they? No, says Hargreaves. But at least the money will be "spent in the UK not in France" and at least we wouldn't have to match investments coming via the EU as we do now. That would save money. Fair enough.

Are there any positive aspects of the EU? Yes. The thing Hargreaves likes and the reason he voted "in" in 1975 is the thing we all want to keep: free trade the "best and the only" reason to want to try and reform the EU. But the level of regulation involved means it isn't free trade any more: just free-ish for those who can cope with a lot of rules. OK. But is it worth giving up the free trade to be released from the rest? We won't be giving it up, says Hargreaves.

"They'll be arguing about this until 2096... there is no way barriers will go up right after we leave we will still be buying German cars and they will still be buying from us." And once the negotiations are over? Simple, says Hargreaves. The end result will just have us meeting all the rules for relevant countries, as and when we export to them.

He is as sanguine about immigration he isn't voting "out" to stop the inflow of labour into the UK. We have an ageing population to support, and it is hard to see how farmers, hotels and restaurants would cope without a pretty free market in labour. So he doesn't see borders closing on Brexit although, like many, he wouldn't be against a little more selectivity.

So let's agree, I say, that getting out would be good in the long run. What about the short term? The pound is all over the place and the uncertainty may well have put off investors: we would see some sort of slowdown there is surely no doubt about that. A fall in the pound is no big deal, says Hargreaves. Everyone wants a weak currency now "we could thank Brexit for giving it to us". There is another case to make for the UK immediately post-Brexit. We would have to get our act together to ensure we remained attractive to global companies.

Hargreaves reckons we could do that by cutting the "worst" tax of all corporation tax. We shouldn't care what tax companies pay, as long as they employ people who do pay taxes (and who get votes in exchange for those taxes which companies don't). Make the tax zero and imagine how the UK would grow, says Hargreaves. "Sort out our labour laws" and we'd be off. Who, says Hargreaves, wouldn't want to operate in a country floating just outside Europe with a benign labour and tax environment? Who indeed.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.