A newspaper article today was headlined, ‘MPs walk out of committee after gloomy Brexit forecasts’. I must admit, its not been easy reading newspapers and other media of late. It forms a depressing start (and end) to the day, particularly as I have been a fervent supporter of UK’s continued relationship with Europe. And given the uncertainties surrounding the future of our nation, none of the commentary is stable (no matter what side of the aisle you sit).
But I have also been a believer that one must read / listen to alternative views to get a more balanced view on things as there could be some merit in the opposition (which I completely agree with and my last blog was on the importance of a strong opposition). And reading alternative views in today’s world isn’t a hard task – the media has become more partisan than ever. Brexit debate certainly has divided us and our thoughts like never before.
As the Prime Minister triggers Article 50 today, the next couple of years will not be comfortable either. Perhaps more uncomfortable than the last few months, although I hope that’s not the case. Change is hard but change of such magnitude can be devastating too – there’s a very fine balance. It won’t be easy for the ministers to come up with plans which fulfil their promises during the Brexit debates. Now is the time to make true those fiscal, societal and regulatory statements which proved to be the steroids of the Exit campaign.
The Great Repeal Bill will bring into UK statute around 19,000 European laws. Some say only for the UK government to ease it for the UK businesses. What does that even mean? Firstly, how long would it take for us to get to a point where that is true and secondly, what happens to those businesses who are reliant on exports into the EU? For the industry I know of, there is talk of equivalence or passporting of EU regulations in order for the banks and other financial services participants to continue doing business in the EU markets. Not that I know much about farming, dairy and other such sectors, but would those businesses not need to comply with European laws, standards and regulations if they want to export goods into those markets?
Some estimates suggest that there are more than £100BN of costs to comply with EU laws on an annual basis, which might be true. But how much of it is really removable?
There are clearly lots of questions and I’m merely skirting on the surface with mine. In the next few years, we are going to have to redefine the business model of the UK. Globalisation is here to stay (despite the rise of populism) and any future shape of our economy must be ready to accept that as a fact. A standalone country with no trade barriers, reduced regulation and low taxation – a model which could work but what does that mean for immigration which has been at the heart of the Brexit debate? To what level can we only have skilled labour as part of our immigration policy? What would that do to the cost of living and the living standards across the country? Is that even a model which would pass international test? Would the nations be willing to give us a free trade pass and also accept our tough stance on immigration? May be, may be not. We don’t hold as much clout as the US in terms of economic power or the size of the consumer market.
We either will come out as smart negotiators or realise quickly that something’s got to give. Businesses don’t like uncertainty. People don’t like change. Demographics are hard to reverse. A smooth transition would mean overcoming all the barriers imaginable – and it would be very important for the economy to not have any bumps along the way.
A hard task indeed – but I hope not something that ends with a hard Brexit.