What happens if there’s no Brexit deal? Over the past year, we’ve had various answers to this question – most ranging from the alarming to the apocalyptic.
But while we’ve heard an awful lot about the problems, we haven’t heard much about solutions. That’s why our think tank, the Centre for Policy Studies, has just published a big report, “A Budget for No Deal”, setting out how the government could stabilise and stimulate the economy if Britain does fail to reach an agreement with the EU in the next 17 days.
Our central argument was that, while the Bank of England will almost certainly ease monetary policy, there will also be a need for fiscal stimulus – measures to reassure consumers in the face of price rises, incentivise businesses to continue hiring and investing, and keep Britain open to trade and talent.
We put forward more than a dozen ideas for how to do this.
These included: putting more money in workers’ pockets by raising the National Insurance threshold (and bringing forward the end of the benefits freeze for those out of work); enabling firms to write off all capital investment against tax; and cutting business rates and National Insurance contributions for small and family firms, which have less of a cushion against uncertainty.
Also on the list would be replicating the Dutch system of tax breaks for high earners who move here; supporting a new generation of free ports; and imposing an 18-month moratorium on new regulation on businesses, together with a sweeping review of the existing burden.
At which point, the obvious question was raised: couldn’t we do much of this stuff already? Why did we need to leave the EU for it?
It’s the same question when it comes to regulation.
A standard Remainer “gotcha” is to ask Brexiteers for a specific list of suggestions for which Brussels rules need to go. Provide a long list, and you will be accused of a cynical plot to destroy workers’ rights while force-feeding them American chlorinated chicken. Provide a short one, and the rebuttal comes back: “Why leave at all?”
The simple fact – as Treasury civil servants doing similar contingency planning have been told by multiple firms – is that there is no magic bullet post-Brexit, whatever form it takes.
Yes, there will be things that we can do better than under the old arrangements. But the principles that will boost growth after we leave are the same as they were before.
That means making Britain the most attractive place possible to start and grow a business. It means designing the tax code so that it pays everyone to work, at every stage of their life. It means incentivising firms to invest rather than punishing them for it. It means providing workers with the essential skills to flourish in a 21st-century economy.
The difference will be the level of urgency. If we are unable to offer investors seamless access to the Single Market, we had better make sure that the offer we do have is pretty damn compelling – that those from overseas, and those already here, have overwhelming reasons to place that big investment or make that marginal hire in this country rather than anywhere else.
Amid the parliamentary shenanigans – whose outcome is still entirely mysterious to pretty much everyone – it’s easy to lose sight of that central truth. But the voters know the score. In a recent ComRes poll, they agreed by a three to one margin that “after Brexit, the UK should position itself as the lowest tax, business-friendliest country in Europe”.
That proposition won solid approval among Tories and Labour, old and young, Leave and Remain. And it’s what we as a country should and must be aiming for – whatever happens in Westminster.