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The next Singapore: Britain must seize this opportunity to slash tax and regulation

Guy Hands
SINGAPORE-ECONOMY
Singapore has built a low tax, dynamic economy after itself leaving a federation (Source: Getty)

I have always been torn over Britain’s relationship with Europe.

While I share the loathing of the most passionate Brexiteer for the arrogance of the Brussels elite and their job-destroying regulations, I also fear the largely unintended consequences of what EU withdrawal will mean both for Britain in terms of prosperity and influence, and for the wider stability of Europe.

This is why, despite agreeing with 70 per cent plus of what the Eurosceptics say about the European Union, I believed the interests of Britain would be best served by staying inside and fighting for reform. It is a view, as Theresa May found at the G20 summit, shared around the world by the majority of Britain’s friends.

I doubt if the new Prime Minister has ever under-estimated the challenges she faces in making a success of Brexit. But if she had, the global leaders queuing up to spell out the difficulties they saw for Britain going it alone would have brought her down to earth.

There was encouragement, of course, that Australia among other countries was keen to forge a trade deal. But that has to be weighed against sombre warnings from the US, Japan, China and South Korea – with populations far exceeding Australia’s 24m people – of the dangers ahead.

2016 G20 State Leaders Hangzhou Summit
Leaders lined up to express their concern about Brexit (Source: Getty)

They were reflecting what, as I know myself, is widespread international disbelief about the outcome of the referendum. It’s a view I heard many times myself in the US over the last month and from friends and business partners in all corners of the world. There is incredulity about the result mixed at times with anger for the added global uncertainty it has caused.

The challenge for the government is to minimise the damage while maximising the opportunities. It won’t be easy but with realism which ignores the ideologues on both sides of the debate it can be achieved.

Read more: Britain rejected free movement but we can still make a liberal Brexit work

We tend to want our politicians to be principled above all, but in this case only a pragmatic approach will deliver the best long-term result. It is encouraging to see the Prime Minister resisting pressure to close down options prematurely and unnecessarily.

It is an approach, too, which must start from a realistic assessment of the challenges ahead. First, there will be no quick agreement with the rest of the EU. The courts are full of couples who believe mistakenly that a divorce settlement will be straightforward. And in this case, the negotiations will be taking place with not one but 27 disgruntled partners simultaneously.

Second, putting in place new trade deals with countries outside Europe is going to take a long time. We may not, in President Obama’s words, be at the back of the queue, but we should not kid ourselves that forging new agreements is going to be either easy or quick.

Third, success in this more uncertain environment will depend on the nature of the economy built in the coming years. Britain has to seize the chance to plot its own course.

If freedom from Brussels is used to cut taxation and regulation, reduce the burden on businesses and look anew at the structure and size of the welfare state, the future can be bright. Investment will flood in, jobs will continue to be created and the UK can look ahead with confidence. Small businesses, in particular those in the service sector, must be freed from red tape so they can create jobs.

This is the chance to emulate, on a much larger scale, the success of Singapore in building a low tax, competitive, dynamic economy which has transformed the living standards of its people. Singapore, too, left a larger if short-lived federation and, despite pessimism, turned itself into a hub for investment and innovation.

But if the opportunity is wasted and Brussels’s red tape is simply replaced by new rules and new taxes, then Britain will have all the disadvantages of the EU without the benefits of the Single Market. Britain will end up back where it started when it joined the EU as the sick man of Europe. The result will be 40 years of economic progress wasted and a dark shadow over our children’s futures.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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