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Space Horizon Edit

Steady your nerve! Brexit is on the horizon

John Baron MP
July 26, 2018

The public continues to be mis-sold the implications of Brexit. Rather than the dour predictions we need to switch the narrative to one that talks up Brexit's advantages rather than treating it as a grave problem in need of a painful solution, John Baron writes. 

The Prime Minister's Chequers Agreement falls short in many respects, and would prevent Britain from taking advantage of many of the benefits of leaving the EU. The 'Common Rule Book' would oblige imports from non-EU countries to follow EU regulations, making it hard to strike the buccaneering free trade deals with countries like the United States, India and China, and there is no clear answer as to how the 'Mobility Framework' will in practice be any different from the existing 'Freedom of Movement' rules which prevent Britain from designing its own independent immigration system.

None of this is compatible with the clear outcome of the referendum, in which over 17 million people voted for change and a clean break from the European Union. Boris Johnson is right to highlight that there is still a way forward to engineer a successful Brexit. The first step should be to recognise that whilst the optimum outcome would be to secure a good trade deal with the EU, we should be prepared to walk away and embrace a no-deal Brexit.

It should be an obvious fact that trade agreements are not a prerequisite for successful and profitable trade – the large number of goods in our shops from the United States and China, even in the absence of EU trade deals with these countries, is a reminder of this. We trade with many major economies outside the EU on World Trade Organisation (WTO) rules, and if people point out that WTO rules do not cover services, then it is equally worth pointing out that Chequers skirts over this area too.

In preparing for a transition to WTO rules, we should take steps to maintain our competitiveness in the global economy. Some businesses grumble at the prospect of falling back on WTO rules, but these grumblings would no doubt be assuaged by deep cuts to corporation tax – indeed, we should consider taking small businesses out of corporation tax altogether. As per my last article, cutting taxes often has the effect of increasing the tax take, creating a virtuous circle for government, business and country alike.

Moreover, those who raise concerns that WTO rules would affect complex supply lines should reflect on the fact that these exist throughout the world across many different customs frontiers – the East Asian markets are a good example of this, and we should not allow ourselves to be a hostage to fortune. In any case, inward investment decisions are based on considerations of relative advantage and therefore influenced by many factors – including labour market flexibility, corporation tax levels, favourable time zones, high-quality higher education (including research and development), respected legal services, quality of life, and language. The UK scores highly on all these fronts, which is why our unemployment rates are a fraction of the EU average and why we will continue to be a profitable and attractive place to do business after we leave the EU.

Ending the application of 'Freedom of Movement' rules in Britain will allow us to design an immigration policy that is both controlled and fair, as well as pro-business. For those of us who grew up abroad, one of the strongest reasons for backing 'leave' was to regain the ability to internationalise our immigration system away from the EU-focused system we currently are compelled to operate. There is a whole world of talent out there, and it is an embarrassment that highly-skilled workers from outside the EU find it so difficult to get visas to work in the UK whilst any EU citizen can do so without any questions. We should no longer discriminate on the sole of basis of nationality.

As Lord Rose somewhat inadvertently admitted to the Treasury Select Committee shortly before the referendum, an added advantage of a controlled immigration policy is that wage growth would accelerate. Big business might not like this, but many working people will see this differently. Furthermore, in the medium-to-long term wage increases tend to boost productivity as firms seek to invest more in improving efficiency.

Such an approach to Brexit needs to be sold to the public, but this is entirely possible if we switch the narrative to talking up the advantages of Brexit rather than treating it as a grave problem in need of a painful solution. If we set out to the public how we are delivering on the referendum mandate, how we are putting together a package of business-friendly measures and reforming the immigration system, we will be pleasantly surprised how much public support this approach enjoys. This then helps to square the problem of the Parliamentary arithmetic – will Labour really vote down such a popular approach? It will be decision time for Jeremy Corbyn.

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John Baron is the Conservative MP for Basildon and Billericay and a former Shadow Health Minister.

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