Only bold thinking will make Brexit a success

 
Tom Welsh
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Theresa May Succeeds David Cameron As The UK's New Prime Minister
"Brexit means Brexit" - that's Theresa May's mantra (Source: Getty)

Theresa May was always going to get a frostier reception in Paris than Berlin.

The most unpopular President in French history, Francois Hollande has proven incapable of resisting the rise of his anti-EU challenger Marine Le Pen and of reviving France’s motionless economy. In a desperate last throw of the dice, Hollande no doubt sees Brexit as his final chance to make leaving the EU look so painful that it dissuades the French public from euroscepticism.

French public policy is also run on very different principles to that of the UK. Fond of national champions and dirigisme, and seeing trade as a zero sum game rather than of mutual benefit, the country’s leaders will attempt to steal business from London – by exacting a high price for the continuation of passporting rights unless we stay in the Single Market (which looks increasingly unlikely).

Read more: Parliament must have role in scrutinising Brexit, according to Lords

Unable to create its own growth, France will try to take someone else’s. This means May needs to do more than cosy up to EU leaders to make a success of Brexit. The City has long operated a dual model: part the financial services capital of Europe and part an offshore centre for global finance. If the former is to fall into decline, we must do everything we can to supercharge the latter.

As Alex Edmans’s demolition of May’s proposals on page 16 today shows, cracking down on big business through flawed corporate governance reforms is not the way to go. If Britain becomes just another social democracy on the fringes of Europe, Brexit could be a disaster. Instead, we need bold measures that will enhance the essential competitiveness of the UK economy, ensuring businesses and high earners see London as the place to be, even if we lose some of our preferential access rights to the EU Single Market. Cuts to corporation tax and the top rate of income tax, planning reform, and a roll-back of some EU regulations (like the bonus cap) should be priorities.

Read more: May gets border deal, but Hollande maintains: "Brexit as soon as possible"

Crucially, they should not be viewed as in conflict with May’s ambition for all parts of the country to share in future prosperity. Not only does London, and financial services in particular, make a vast contribution to the public finances, but a more dynamic economy is in everyone’s interests. If Brexit means Brexit, let’s make sure we make a success of it.

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