We’re all euro-sceptics now

Book review: Clean BrexitA coherent if optimistic take on what drove voters to vote for Brexit.

Published by Biteback Publishing, £20

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Amid the daily flow of news, opinions and speculation about the Brexit process, coloured as each soundbite is by prejudice and entrenched views, it is very hard to understand what brought Britain to vote for Brexit, what it entails and what the consequences might be. From the Brexit camp, Liam Halligan and Gerard Lyons, two distinguished economists who have spent their careers in the practical world of finance, have set out their blueprint.

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As anyone who has read Halligan's articles in The Sunday Telegraph and Spectator would expect, the book is well written and well structured. The five parts of the book are divided into 15 chapters. These are preceded by an introduction summarising what the authors are going to say and are followed by a conclusion summarising what they have said. Yet, at 320 pages, this book is no door-stopper.

"Clean" Brexit is their phraseology and indicates their preference for an exit from the single market and the customs union; "Messy" Brexit means staying in one or both. These options are popularly described as "hard" and "soft", but the authors believe that the cherry-picking option of "soft" Brexit will lead to acrimony, uncertainty and chaos and cause long term damage to relations with the EU.

The authors remind us of some facts that the Remain camp prefer to ignore; for example, that only 6% of the UK population support the EU agenda of "ever closer union". We are all eurosceptics now. The Treasury prediction of an immediate recession if Britain voted for Brexit, with GDP forecast to fall by 1.4% in the second half of 2016, is compared with the actual outcome of growth of 1.2%.

They point out that the EU has signed free-trade agreements with countries representing only 10% of global GDP, whereas Switzerland has deals with countries representing 50%. They remind us that the single market and the free-trade agreements, past and prospective, focus on goods, not services, to the detriment of the UK.

Yet the authors are no cheerleaders for the government, which they criticise for failing to unilaterally grant permanent residency to the three million EU citizens living in the UK at a much earlier stage. They support a transition period of up to two years, but question the need for a free-trade agreement with the EU before departure, believing the UK should focus on other countries first. They outline paths to secure the continued prosperity of sectors from farming to finance and car manufacture, and they urge a post-Brexit focus on investment (notably in housing), innovation and infrastructure.

In short, they are optimists, assuming that self-interest and common sense will triumph on both sides of the Channel. Perhaps they overestimate the capacity of the UK government to manage the Brexit process and its aftermath or is this observation just an echo of the lack of national self-confidence that caused the UK to join the EEC in the first place? Either way, if the Remain camp had set out their arguments as cogently and persuasively as Halligan and Lyons have, they might have won.

Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.