Conservative leadership race must speak to the City

Tom Welsh
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David Cameron Holds The First Cabinet Meeting Since The UK Voted To Leave The EU
Justice Secretary Michael Gove wants to be Britain's next Prime Minister (Source: Getty)

As Michael Gove’s former head of communications, James Frayne, argued in City A.M. on Tuesday, nobody should be surprised that politicians lacked a ready-made vision of what Brexit will look like immediately after last week’s shock vote.

UK politicians have abdicated responsibility over issues like trade policy to EU fonctionnaires for over 40 years, so they have never needed to concern themselves with grand questions such as Britain’s place in the world.

But that can be an excuse no longer. With the leadership race suddenly getting interesting – with a plot line more devious than an episode of House of Cards after Boris Johnson’s dramatic knifing – the Tory contenders need to set out what they’re looking to achieve during the exit negotiations sharpish, or the City will assume the worse.

Read more: Boris “is the general who abandoned the field” says Heseltine

What we’ve heard so far is embarrassingly vague. Can we assume from Theresa May’s statement yesterday that access to the Single Market in services is so important that she favours a Norway-style relationship? Or does her view that an end to free movement is non-negotiable mean prospects for EEA membership are dead? Will Gove stand by his argument during the referendum campaign that countries like Albania do just fine outside the Single Market, and that Britain shouldn’t worry if that’s what we end up with? Was his sudden break with Johnson driven by concern the former mayor was backtracking on delivering the new political and economic settlement that the Brexit vote apparently signified?

Expecting everyone to read the tea leaves from such ambiguous statements will only prolong the uncertainty that threatens to pitch the economy into recession, and which is no doubt influencing businesses like Vodafone as they reassess whether they’ll remain headquartered in Britain. There is a case for not setting red lines, but firmer direction is vital.

Read more: Now London must "take back control", says London mayor Sadiq Khan

The one politician to come out of this political mess with any credit is London’s mayor Sadiq Khan, who immediately grasped Brexit’s significance. Reassuring migrants that they are welcome was an important first step, but equally significant has been his push to ensure London-based financial institutions retain passporting rights.

We’re witnessing a redrawing of the battle lines after the referendum result, with the trade-off between limiting immigration and retaining free access to the Single Market the new point of contention. It would be nice to know at least who is leading each side.

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