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Why we need a Quick Brexit
It's neither a Hard nor a Soft Brexit we need, says Matthew Lynn. It's a Quick Brexit. Britain can iron out the details later.
(Image credit: Copyright (c) 2017 Rex Features. No use without permission.)
Hard or Soft? Open or Closed? Red or Blue? If the UK had a couple of extra car factories or profitable steel plants for every type of Brexit that's been argued for over the last few months, we would have to worry much less about the state of the economy. But there's one version of Brexit that should be a far higher priority for everyone, and yet which is hardly ever mentioned. A Quick Brexit. The sooner we get this done, even if we don't quite get all the details right, the better.
As anyone in business will tell you, sometimes it is just as important to get things done quickly as it is to get them completely right. That is why the technology industry releases 1.0 and 2.0 versions of its products because they need to get them out there, and then tweak them later if necessary. We should try the same strategy with leaving the EU for three main reasons.
First, it will end the uncertainty. Despite the dire warnings last year, so far we have seen very little impact on business confidence in the UK. Most companies have carried on much as they did before the referendum result. The pound has stabilised, and the FTSE is hitting record highs. But that doesn't mean disaster won't strike one day, and the longer the negotiations are stretched out the worse it will be. If there are to be tariffs and customs checks, then the sooner everyone knows about them, and how onerous they will be, the faster they can start adjusting their export plans and supply lines to take account of them.
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Second, we can start planning for what comes next. What kind of trade policy do we want, where are the deals, and how do tax and regulation fit into that? There are lots of issues the UK will have to debate as we gradually repatriate powers from Brussels. If the EU does impose tariffs, we will have to decide whether to retaliate in kind or just take the moral high ground and declare unilateral free trade. We will need a debate on what kind of agricultural policy we want once we are out of the EU do we subsidise production or just let the market decide? What kind of industrial policy do we want protectionist or open? Those are all complex questions, and they are issues we have hardly discussed for decades. But we can't start doing that until we know the terms of our departure.
Finally, whatever we agree in this round of negotiations can always be improved upon later on. Leaving the EU was always likely to be a process rather than a single event. This time around, for example, we might decide to stay in the single market for a transitional period. We might concede control of financial regulation to help out the City, or we might let the European courts have some continuing jurisdiction over EU citizens who are already living here, if not on those that arrive in the years ahead.
The odd £10bn on the exit bill, or some extra rights for EU citizens, don't matter that much in the end. In truth, if we were willing to concede more than is probably fair on those two issues, then a Quick Brexit could be wrapped up by Christmas. That would probably involve the UK making some major concessions, and not asking for very much, if anything at all, from the other side.
But so what? Given the massive budget contributions we have made over the years, our huge trade deficit with the EU, and the one-sided nature of freedom of movement, the UK was on such a bad deal that whatever we agree with the EU will be an improvement. Once we have left, businesses will know where they are. And the rest of the country can get on with shaping its post-EU economy far more useful than haggling endlessly over every last detail of our departure.
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Matthew Lynn is a columnist for Bloomberg and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
