Why a no deal Brexit is a huge opportunity for the UK

12 Dec 2018

 

Theresa May’s Brexit deal is almost certain to be defeated in Parliament by Remainer and Brexiteer alike. The EU has repeatedly said that they will not re-open negotiations if May’s deal is defeated. The default option is No Deal. 

 

Whether we like it or not, we must prepare for a No Deal Brexit. The uncertainty has been created at least in part by the lack of preparation for a No Deal, which should have started the day after the referendum.

 

Brexit is what governments, businesses and individuals choose to make of it. People voted Brexit for a variety of reasons, but all sought to take back control of our laws, economic policy, and borders. 

 

When the UK is liberated from the economic and political regulations of the EU, the UK could opt for Corbynite socialism, with state planning only possible outside the EU, or a radical, low tax, free trade policy which some have termed ‘Margaret Thatcher’s fourth term’. That is the whole point of Brexit – people will have a genuine choice over the future direction of their country.

 

Should Parliament vote down May’s deal, a new government could emerge. The new government should announce that the UK is leaving the EU (and all the common policies) on 29th March, 2019, and offer reciprocal arrangements to the EU. 

 

These should consist of zero tariffs and quotas on goods and services between EU and UK; mutual recognition agreements covering standards in goods traded between EU and UK, with EU and UK authorities (not the ECJ) ensuring conformity; passporting rights for EU and UK financial services; and reciprocal rights to remain for EU and UK citizens. 

Should the EU reject these terms, and impose tariffs on the UK, we would impose reciprocal tariffs on the EU. The EU would be held responsible.

 

In 2017, the EU had a £67 billion trade surplus in goods and services with the UK. In the final analysis, it is highly unlikely that the EU would risk losing that trade by imposing tariffs on the UK. Indeed, the prospect of No Deal may be the catalyst to secure a comprehensive free trade deal. 

 

Any responsible government must plan for the eventuality of a No Deal Brexit, and the government must develop the physical and digital infrastructure required. This includes electronic pre-checks and trusted trader schemes to ensure frictionless trade between the EU and UK, maintaining supply chains and preventing a border in Ireland, or in the Irish Sea. 

 

If tariffs are applied, and supply chains are affected, the revenue from these tariffs should finance tax cuts for firms who manufacture components in the UK. This would boost manufacturing, reducing waiting time for components as well as decreasing CO2 emissions. 

 

We do not need trade deals with non-EU countries to unilaterally abolish tariffs on food and clothing that we do not produce in the UK. This would cut prices drastically, benefitting those on lowest incomes the most, and raising living standards. 

 

The recent Bank of England forecasts were dubious worst case scenarios. A No Deal poses at least as many opportunities as threats. For a start, the UK will not be bound to pay the £39 billion “divorce settlement” which May agreed to last year. In addition, the UK would not pay the annual EU budget contribution. 

 

Part of this money could be used to finance the tax cuts which the “level playing field” approach of the Political Declaration prohibits, such as cutting corporation tax to 15%, lower than anywhere else in the EU, making the UK an attractive place to invest. A comprehensive one-year tax exemption should be granted to start ups, covering income tax, national insurance, VAT, corporation tax and business rates. 

 

The notion pronounced by the pessimists that the economy will collapse when freedom of movement ends is preposterous. With 476,000 young people unemployed in the UK, and a shortage of engineers and technicians, it is time to invest in our young people.

 

Tax breaks should be granted to firms which recruit UK nationals as apprentices. The Apprenticeship Levy must be abolished, as this is deterring firms from taking up apprentices. This would increase skills, living standards, and drastically reduce welfare bills. 

 

Free trade deals with the emerging economies of the world will be even more essential in the event of tariffs on goods and services traded between the UK and EU. These can be negotiated and implemented rapidly. 

 

To capitalise upon the opportunities of global free trade, the UK must tackle the historic problem of outdated infrastructure. The record low interest rates enable the government to issue bonds to invest in infrastructure. 

 

This would include road, rail, and air transport links. Specifically, free ports could be created, allowing goods to be imported, manufactured or re-exported exempt from customs duties. This would boost manufacturing, disproportionately helping the North. 

 

The UK could become self-sufficient in energy, reducing CO2 emissions caused by importing energy, while safeguarding our national security. The UK should lead the world in carbon capture technology, creating thousands of skilled jobs for engineers and scientists.

 

The VAT on building conversions should be cut to zero (as it is for new build properties) to end the scandal of 200,000 empty homes when the country faces a serious housing shortage. The construction industry could recruit thousands of UK-born apprentices to become skilled constriction workers. 

 

By focussing on social and affordable housing, those on low incomes would have a place called home, housing benefit bills would be drastically cut, and tenants could buy their homes. For every home sold, anther would be built. 

 

With many rural and urban areas subject to poor internet connectivity, high-speed fibre optic broadband across the whole of the UK would greatly speed up communication and commerce. 

 

A clean Brexit would not only deliver on the verdict of the people, but could be the progressive force for change which Brexit voters championed in the referendum. 

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