Five ways to build a better Brexit

The serious business of negotiating Brexit will soon be underway. The government is about to publish a series of position papers, which will set out its thinking on everything from the border with the Republic of Ireland, to technology, immigration, regulation and taxations. We saw the first of those this week, with a proposal to remain in a temporary customs union. How much the rest of the EU will agree to remains to be seen – but at least the British view of its relationship with the EU will have been set out.

Business, on the other hand, needs to up its game. It should stop moaning about what a mistake it all is and start arguing for the kind of policies it wants – because if it doesn’t do that now, it will soon find that all the important decisions have already been made. So what should business be arguing for? Here are five good places it could start.

First, immigration. True, the leave vote was to some extent driven by anger over the numbers of new arrivals. But British firms have become used to an endless supply of cheap, relatively low-skilled labour and it is not going to be easy to change that now. Just because the UK will have control of its own borders again doesn’t mean we have to close them.

A post-Brexit immigration policy should draw in people from around the world,    and not just the EU – but including lots of Poles, Hungarians and Romanians as well. Over the medium-term, that will keep the economy expanding – and that will be better for everyone.

Next, completely open trade. There doesn’t need to be a debate about whether we stay in the Customs Union long term, or whether we strike trade deals with different countries around the world. We should simply declare the UK a unilateral free-trade zone, dismantling any form of protection, and then ask other countries to do the same for us. Even if they refuse, we will still benefit, because tariffs are ultimately paid by customers in the country that imposes them. Over time, increased competition will strengthen British competitiveness, just as it has done for every other country that has abandoned protectionism. Business needs to be taking the lead in making that argument – because it is business that will ultimately benefit.

Thirdly, lower business taxes. No one realistically thinks we can turn the UK into Singapore-on-the-Thames (even if it might be a good idea). The UK is too big a country, with too strong a tradition of big government, for that to happen. But once we leave the single market, we will need some kind of competitive edge. Lower business taxes is a good offer, and one that can easily be delivered. 

Fourthly, help the few sectors that will genuinely suffer. Car manufacturing, aerospace and financial services all benefit significantly from EU membership and there is no point in pretending they won’t take a hit. But that can be mitigated with the right policies. Where necessary, companies might have to be offered some subsidies to help them through a transition. At the same time, in those sectors we should harmonise our regulations with the EU. It will be far easier for those companies if they are still effectively operating on European regulatory standards. That means some notional sovereignty will be surrendered, but no one is really that bothered.

Finally, focus on the sectors of the economy where leaving the EU will help us. In areas such as technology, where the EU is increasingly protectionist, to agriculture and food manufacturing, we can become one of the most deregulated countries in the world – and a laboratory for new ideas. Over time, that will lead to more inward investment.

  • endorendil

    Sorry, but “dismantling any form of protection” betrays a complete ignorance of what protects markets and hinders trade. It had been decades that tariffs were the main barriers to trade, at least for developed countries. The main barriers to trade are non-tariff based. Things like rules of origin, that you need to implement sanctions on Russia, North Korea or Iran, but also to make sure that Japan does not abuse a trade deal the UK makes with the EU. Another barrier is sovereignty: if the UK wants to be able to regulate what is sold in its market, it is effectively protecting it.
    The people that do not understand non-tariff barriers at least in principle, are not really worth listening to. IDS understands them enough to have argued that the UK should allow anything in the country that can be sold in India (his example). That is a complete abdication of the sovereign right to regulate products. It is just not going to happen in a democracy.

  • FourTuna

    “A post-Brexit immigration policy should draw in people from around the world, and not just the EU – but including lots of Poles, Hungarians and Romanians as well. Over the medium-term, that will keep the economy expanding – and that will be better for everyone.” — An expanding economy will be beneficial. But the vote to leave was at least partly because of the Poles, Hungarians and Romanians coming here to work. Many feel they undercut the low paid indigenous population with some justification. Do you propose to ignore that?

  • Sajid Jones

    Who has paid you to write this article?

  • Chris Bruce

    Even for someone who has such previous as the writer of fatuous Brexit nonsense (Brex-shit) this is a beaut; worth reflecting on if a person is ever tempted to forget what egregious nonsense the whole project is.

    So the core of our economy will need subsidy – automotive, financial services, aerospace – to offset the drag of Brexit. Strange admission from a free marketer!?

    Meanwhile agriculture will be braced by the UK becoming a dumping ground for agricultural commodities. Please tell the farmers; if they knew, they would feel consoled for the loss of their access to their seasonal work force.

    Please, please will someone tell me what we stand to gain from Brexit; really; what? And please, will someone break it to the people who voted for it that there are going to be even more Poles, Roumanians, and what-you-will nationalities working cheap to keep our economy going in the face of a dose of double strength globalisation; please tell them what the Brexit chiefs really intend – so they can start to organise their lynch mobs.

    And please too, can the editorial team tell me why MW hosts this re-heated Daily Telegraph twaddle?

    • Robin King

      Anyone who thinks the people of Romania are ‘Roumanians’ is spouting twaddle

      • Chris Bruce

        Thanks Robin. Quite correct – it’s just that ‘Rou-‘ was the way it was spelt before we joined the EU; I got confused and chose the wrong option. It’s the zeitgeist – oops, I mean it’s what we do now.

  • Miquel46

    Taking your 5 points Matthew…

    Aside from genuine political asylum seekers (tiny %), migration has, and always will be, an economic construct. Brexit won’t alter that, in, out, soft, hard. If the pound falls much further too, ironically it’ll be the Brits who’ll start to demand free movement of labour. Remember ‘auf wiedersehen pet’? Geordie economic migrants heading to German building sites and the strong Mark? Not that long ago really.

    Completely Open Trade? I can’t think of a single UK industrial sector that wouldn’t be outflanked by a foreign competitor in these circumstances. Why would I buy my levi jeans from House of Fraser when I can import them for half the price direct from the U.S, tarrif free? You get my gist.

    Singapore has no meaningful welfare state to fund & as a one party state, is able to confidently make long term strategic social/economic policy efficiently. With little political financial attrition, it needs less tax to achieve more. The UK is the opposite. Its electorate expects generous public provision that someone else pays for and every few years a new government comes in & invoices the State for its own hollow, Tabloid titillating, short term, ideological initiatives.

    Your idea of state subsidy directly challenges EU directives meaning those industries would lose ‘equivalence’ status overnight. No equivalence, no EU market access. No frictionless EU market access directly threatens Filton & Broughton (Airbus) to name but one example within your cited industries. Your comment typifies current Brexit thinking – it’s naïve and ill informed. I’m neither pro or anti Brexit, rather pro honesty. Brexit could work, but without erudition and realism it’s a major economic threat. Your comment about ‘no one is really bothered’ about sovereignty is also fanciful. Around a 1/3rd of the UK electorate continue to state they are happy to suffer major economic hardship to achieve their ideas of sovereignty and the number of non UK nationals resident this side of the white cliffs.

    Agriculture & Food Production are a tiny percentage of UK GDP. Further, if tariffs were removed, food imports from India/Africa would decimate UK agriculture overnight. You’re aware, I’m sure, what India told Fox during his much trumpeted trade “mission” there? And why there was virtually no noise as he sheepishly scuttled back up the aircraft gangway a few days later. You seriously think Tesco & Aldi wouldn’t stock the cheapest food they could lay their hands on and that the British consumer wouldn’t buy it?
    Brexit’s opportunities won’t open until its supporters get real.