Advertisement

Five key tasks for the next prime minister

Our next prime minister should not obsess about Brexit, but face up to other pressing issues, says Matthew Lynn.

949_MW_P14_City-View
Johnson leads a crowded field

Our next prime minister should not obsess about Brexit, but face up to other pressing issues.

It is surprising to me that so many people still want to be prime minister. As Theresa May would surely tell you, it's a thankless job. Still, for their own mysterious reasons, lots of people seem to want the prize. In a crowded field, Boris Johnson is the clear favourite with the bookmakers to replace May as Tory leader and PM, with Dominic Raab and Michael Gove lagging behind. By Tuesday morning, ten candidates had declared, and a few more may have thrown their hat in the ring by the weekend. Conservative MPs will narrow that down to a final two, and then the question will be thrown open to the party's 160,000 members to decide on a leader.

Advertisement - Article continues below

With grim inevitably, the debate will all be about Europe. Yet the one thing we have surely learned over the last three years is that the EU doesn't make much difference to the economy one way or another. After all, just about everyone assumed we would be leaving in March, possibly without a deal. And what happened? The UK grew slightly faster in 2018 than its main competitors such as France, Germany and Italy. Employment rose to record levels. Investment continued to come into the country, the pound remained stable, and real wages started growing again.

Advertisement
Advertisement - Article continues below

Membership of a big, but not terribly successful, trade bloc is a useful thing to have, but hardly critical. My estimate is that it ranks seventh on the list of factors affecting the British economy, behind demographics, tax rates, levels of entrepreneurship, skills, infrastructure, and domestic regulation, but ahead of the legal system, political stability, and income distribution, which round out the top ten. You can argue with the rankings, but if you're being honest you'll surely admit that membership of the EU is only one factor among many. There are far more important things we should be worrying about.

The things we should be worried about

infrastructure needs upgrading

Advertisement - Article continues below

We should also cut the entrepreneur's rate of capital-gains tax down to zero so that people from around the world can start a company in the UK and keep all the money they make (after all, we'll benefit from all the income tax paid by their staff).

Third, we need to find the right kind of regulatory regime for the wave of new technologies coming through, such as drones, lab-grown meat and driverless cars. There is plenty of history to tell us that the first country to have fair regulations attracts lots of investment.

Fourth, we need to reinvent employment law to take account of the booming gig economy. Staff operating flexibly deserve rights and protection, but we also don't want to punish the companies using them. We need to drive forward the boom in entrepreneurship, which has seen the number of companies in the UK triple over the last two decades, with the emergence of a vast number of micro-businesses. If we suspended national insurance and pensions contributions for the first five employees a company takes on it would help those firms expand without costing very much.

Finally, we need to extend working lives to cope with demographic change. The first developed economy to figure out a way of integrating its 70-somethings into the labour market will reap rich rewards.

All that is just for starters. The City and business need to find a way to make sure the candidates for prime minister lay out their plans for all those issues. They matter just as much as whether we are in or out of the EU and, if we do end up leaving, it will be crucial that we are competitive in every other respect. If the candidates are simply allowed to obsess about the EU, it will be a big mistake.

Advertisement
Advertisement

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Beyond the Brexit talk, the British economy isn’t doing too badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Businesses must be bold if they want to survive
UK Economy

Businesses must be bold if they want to survive

It’s a difficult time for companies, but battening down the hatches is the wrong approach, says Matthew Lynn.
2 Aug 2020
How Russia’s dirty money sullies Britain
UK Economy

How Russia’s dirty money sullies Britain

Russia’s kleptocrats have grown used to laundering their money and reputations in London. The government has promised change, but how serious is it?
1 Aug 2020

Most Popular

Gold bugs' dreams are coming true – but we could still see a V-shaped recovery
Gold

Gold bugs' dreams are coming true – but we could still see a V-shaped recovery

John and Merryn talk about how it's perfectly reasonable to expect a V-shaped recovery and to continue holding gold as well. Plus, inflation, staycati…
30 Jul 2020
UK banks have had a shocking week – so it’s probably a good time to buy
UK stockmarkets

UK banks have had a shocking week – so it’s probably a good time to buy

Lloyds Bank reported a £676m loss this week. And, with all of the UK's high street banks having a terrible time of things, bank stocks are detested ri…
31 Jul 2020
The charts that matter: gold finally sets a new record high 
Global Economy

The charts that matter: gold finally sets a new record high 

As gold surges past its previous high, John Stepek looks at how it's affected the charts that matter most to the global economy.
1 Aug 2020