Standing outside the Commons, new Prime Minister Theresa May proclaimed that we are going to make a success of Brexit. One of her first tasks is to reassure the country that a plan for a post-Brexit Britain will be presented as soon as reasonably possible.
While there is a tiny minority who remain unwilling to accept the decision of the British people, and sadly continue to talk our great country down, let’s instead borrow a phrase from the late Ian Dury and offer the British people a few reasons to be cheerful.
After the initial anger – with some in Brussels calling for Britain to trigger Article 50 and to leave quickly so they can proceed with building a political union – we now see cooler heads prevailing among the EU heads of government. Fortunately, the vast majority in both the UK and the EU want to remain in a close relationship based on cooperation and trade where it is in our mutual interest.
There are plenty of possibilities for how that relationship might look: an UK-EU trade agreement with cooperation in other areas; the European Economic Area (EEA) option; customs union; and the World Trade Organisation (WTO) option.
It is important that London, as a global city and not just a European one, retains its position as a global financial hub – even if some euro-related trade moves to Dublin, Paris or Frankfurt.
Many people have argued in favour of full membership of the single market. However, EU leaders maintain that they will never allow free movement of goods, services and capital without free movement of people.
While London has benefited from immigration, we also need to recognise that for many, this Leave vote was the manifestation of concerns about immigration. For some – especially outside of the capital – the concern was the impact of immigration on public services and wages. For others with non-EU family links or businesses looking to recruit from outside the EU, the concern was that non-EU citizens were being discriminated against in favour of EU free movement.
For that reason, once Article 50 is invoked, I believe we should work on the basis of seeking a UK-EU trade agreement covering goods and services. It will be a tough negotiation on both sides, but we are up to it.
On goods, things ought to be straightforward. After all, the UK has a record trade deficit with the EU, widening to £23.9bn in the first three months of 2016. Even with a weaker pound, the EU has no incentive to drag its heels. On services, governments in Berlin and Paris will be under pressure from the financial districts of Frankfurt and Paris to reduce London’s role as the global financial centre.
This is where there will need to be a trade-off on other areas, such as support for EU programmes on research and innovation, student exchange, maintaining our participation in the European Investment Bank, aid to “new” EU states, and perhaps cooperating and offering assets for EU operations of mutual interest, such as protecting the EU’s borders.
For financial services there will be other issues to consider such as regulatory equivalence and passporting of services, since all companies wishing to sell into the EU’s Single Market would need to show that they meet the standards set within it. Initially, this should present no real barriers since all EU legislation and type approval standards are already applied in the UK. Over time, we would be in a similar position to the US, which has recently adjusted its data protection standards to allow US companies to access European digital markets.
Free-traders in Brussels and other EU countries are concerned about the impact of losing the UK as a proponent of open markets. While a more protectionist EU may present an obstacle for us to negotiate access, it would also offer an opportunity to compete with a continent where increased protectionism and red tape will suffocate enterprise.
We must not delay in beginning talks with as many countries and trade blocs as possible. It has been reassuring to see both George Osborne and Sajid Javid starting talks with potential trade partners, especially those that are increasingly frustrated by the EU’s vested interests and the tortoise-like speed with which it moves on opening trade, crawling along only as fast as the most protectionist member state allows.
As we negotiate those deals abroad, we must also look again at how we build the skills and infrastructure for a global economy. Our education system will need a greater focus on languages and tech, and London will need more airport capacity.
The past few weeks have seen uncertainty, but with a new Prime Minister in office we can now move to show that we will make a success of Brexit. We owe it to the British people to deliver the new relationship that they voted for, and to ensure that we in Britain become good neighbours, as we cease to be reluctant tenants.