Having been promised an apocalypse if we had the temerity to vote leave I venture to suggest that it’s not turning out quite so badly. There is still much to resolve and the tough decisions are some way off but in the meantime life must carry on. So if you’re wondering what it means right now can I offer the following:
- Don’t panic. We haven’t gone to Mars, we haven’t even left Europe, just the European Union. Calais is still only 22 miles from Dover (about 12 hours by car or rail)
- Out is the new In. We’ve left the European Union, an enclosed trading area of 500m people and are free to trade with everyone now as freely as we like, so long as they agree. We’ve been making significant strides in this already with our non EU exports up 6.8% a year since 1999. We can join the World Trade Organisation and have a baseline of tariffs of 3%, not perfect but not a disastrous starting point.
- Don’t panic. Thankfully and I mean THANKFULLY we are not in the Euro and our currency devaluation not only does it mean our exports are priced as keenly as mustard – so keenly that Tata have postponed the sale of their Port Talbot plant – but if you want to sell your business then the overseas buyers will be almost 20% keener than they were.
- Inflation is good(ish). With a weaker currency our imports costs will rise. Everyone will use this to put their prices up. So should you. Even if you employ descendants of the Norman Conquest on land that produces King Edward potatoes and sell them to Smiths Crisps you will have some foreign inputs to justify increasing your prices. If you are uncertain just practise looking in the mirror and repeating the phrase “It’s Brexit mate” until you believe it yourself. Add “Innit” if you’re still having difficulty.
- Don’t panic. If inflation takes hold our national debt will finally reduce as a % of GDP. And as interest rates rise to satisfy holders of the devaluing of their investments you’ll be able to put money in the bank and get a return on it.
- We did it before so we can do it again. Those of us who worked before Maastricht didn’t have any problems selling goods and services in Europe. If you need an EU subsidiary to enable you to trade within the EU then you can get one. I doubt that it will be long before at least one country sees this as an opportunity and creates a cheap and fast hub in say Dublin or Copenhagen, which would validate transfer prices and ensure compliance with appropriate regulations.
- Don’t panic. The overseas businesses are not all going to leave. Pre-Brexit I used to listen to some hedge fund managers threaten to move to Switzerland if taxes rose. But they didn’t. Even for financiers there’s more to life than money. Do you know what is on at the theatre in Geneva? And could you understand it if you did?
- We can create new funds for scientific co-operation, farming subsidies and fisheries that are more effective than EU wide ones. In fact this has been announced in the time it took me to write this blog.
- Even better we can have new subsidies that won’t be prohibited by the State Aid rules. For example we can have as an Export tax credit scheme which I and other have proposed over recent years.
- Don’t panic. The labour laws in France and Germany are so strict that even tube drivers are envious. So moving large numbers of bankers there is unlikely. The need for flexibility will keep them here and so most (OK not all) of the industry will remain.
We’re going to have to pay something to the EU and the chances of us seeing that £350m in the NHS are as likely as winning the World Cup in the next 50 years. But so long as we don’t let the lunatics take over the asylum, and curbs on immigration are based on need not prejudice then we’ll be fine.