Over the past 15 months we’ve spoken to City insiders and those with political and diplomatic experience about how Brexit could affect Britain’s economy. This week, we talk to a man with a foot in both camps.
Steven Woolfe MEP is City lawyer who has worked for several top financial institutions (including UBS and Standard Bank) and was a senior figure in the Hedge Fund Association. In 2014 he was elected to European Parliament under the Ukip banner for the North West region. Now an independent MEP, he is a member of the European Monetary Affairs Committee, “one of the only members who has actually worked in banking”, he wryly notes.
Woolfe developed Ukip’s migration policy, and continues to be interested in this area. Earlier this year he published a paper for the “Leave means leave” pressure group on how immigration policy could work after Brexit.
His idea is to have a fixed number of work permits, which would be allocated to various sectors by a special advisory committee, based on consultation with industry. The individual visas would then be allocated on a points basis, so they would go to those most qualified. In effect, “people would be admitted on the basis of their CVs, so highly skilled workers would still be able to work here, while reducing net migration to around 50,000”.
Woolfe agrees that a special visa should be created to allow (or even encourage) those EU citizens already working in the UK to remain in an attempt to minimise disruption to the economy. However, he thinks that in return they should notify the government of their intentions and observe UK laws. This means their automatic right to bring in foreign spouses should be replaced with one conditional on income. Woolfe thinks it is unfair that “if you fell in love with an American you would have to earn a certain amount of money before they would be allowed into this country, but Europeans can bring in anyone”.
He’s also bullish about the benefits of Brexit for both the City of London and the wider economy. In his view, “European regulations have imposed huge costs especially in the areas of reporting, capital requirements and bonuses”. Indeed, he is particularly critical of the Mifid II (Markets in Financial Instruments Directive) rules on solvency and benchmarking. Leaving the EU will also allow us to reform the taxation system in a more business-friendly way and make it easier to support firms directly (which is currently made very difficult by rules requiring Brussels to approve anything that could be seen as state aid for companies).
Woolfe suggests that the government can deal with the possible loss of financial passporting by setting up a dual regulatory regime. This would allow financial institutions dependent on access to the single market to keep doing so, provided they followed EU rules. However, at the same time, those companies that just wanted to operate domestically would benefit from lighter regulation. Such a regime would also make it easier to trade with non-EU countries. At the very least, government should urgently review the impact of EU laws on small and medium sized companies.
Trade is also another area, where Brexit has the potential to boost national income with Woolfe optimistic that we can quickly cut deals with other countries, especially the United States, Australia and Canada. Having visited the US several times recently, and spoken to various politicians, he thinks that, “there is a strong desire for a trade agreement”. However, he is unhappy that the EU is (in his view) trying to sabotage the process by insisting that we conclude Brexit negotiations before negotiating new trade agreements, with any formal deals delayed until after 2021. He considers these demands to be “nonsense” and thinks that the government should make clear that this is “unacceptable”.
Last year, Woolfe publicly declared that he was impressed with Theresa May’s determination to leave the EU. However, while he still doesn’t doubt her convictions, he thinks that those advising her “are too trusting of Brussels”. He is also worried that optimism around Brexit “is being tainted by those who don’t want to see the advantages”. However, the biggest problem is that the EU isn’t negotiating in good faith, but instead working hard to “delay, obstruct and effectively ensure that Britain doesn’t leave”. In order to prevent Brussels succeeding, the Prime Minister needs to call their bluff by making it clear that “no deal is better than a bad deal”.