Journal column March 2018

15/03/2018

 

I never smoked. I don’t like smoking but I tolerate smokers. The most passionate anti-smokers I know are former smokers, who have changed their minds and kicked the habit. The same is true of Brexit. I am a former ‘Remainer’. I changed my mind and kicked the habit; now I feel passionately that we need to get on with Brexit and stop the carping and negativity.

The North East Chamber of Commerce recently said the Government should re-think its current position of leaving the customs union. Respectfully, I disagree. Outside the customs union, Teesside can establish a fully-fledged Freeport. The Chamber of Commerce know this, which is why it could not publicly support the Freeport letter sent to the Chancellor that scores of business leaders signed last month. Furthermore, being within the customs union will prevent the UK from implementing new trade agreements with the majority of global trading nations, which are outside the EU, as Mrs May explained in her excellent and well-received Brexit position statement two weeks ago.

In the last year, I have been to, or talked to friends in, a number of Commonwealth countries; Canada, Australia, South Africa and the Caribbean among them. Talking to business owners in South Africa last year, I was impressed by the latent entrepreneurial spirit of the country. Its new President, Cyril Ramposa, was successful in business and has wide-reaching and progressive policies to encourage business starts and scale ups. It is a country with high-growth potential. The UK already has in-built advantages in trading with these countries, the systems of law are similar to ours, there is a common language, many even drive on the same side of the road and have the same electricity sockets! The Queen is on many of their banknotes and is either Head of State or Head of the Commonwealth to which they belong.

On a recent visit to the Caribbean, I saw first-hand why Brexit will encourage proper free trade between countries. I visited a cocoa plantation. The farmers grow cocoa beans in the tropical climate and create a harvest that goes on year round. They are not rich and the company that owns the planation wants to improve their lot by investing in a cocoa refining plant to make chocolate. However, with cocoa and other commodities, like coffee, the EU customs union actively prevents this. Why? Because raw materials like cocoa beans attract little or no duty. However, refined food products, like ground coffee or finished chocolate do attract duty. The customs union is simply a trade wall designed to protect EU food production businesses. Who loses from this? The poorest people in developing countries, who are starved of investment and industry, and the poorest people in the EU who pay the largest proportion of their income on food that is kept at artificially high prices.

Proper free trade, would see our manufactured goods, our know how and services being bought in growing countries, which in turn can access our own markets on the basis of sound prices and fair duties. There is a strange and unlikely fellowship of bigger businesses and some politicians seeking to stop this. The biggest firms love the protection of tariffs within a customs union as they prevent proper competition.

The reason so many-people were upset about Brexit recently was the leak of documents assessing the economic impact of different scenarios. Even some respected commentators said the documents described the amount our economy would fall; in truth the documents were detailing a view on the amount less they would grow, a subtle but critical difference. Furthermore, the modelling was undertaken without estimating the effect of new policies designed to boost our output; for example in the North East the assessment did not include the likely impact of the new South Tees Development Corporation. Poor evidence put into a computer model will result in poor evidence out. The same type of reports were used to convince people like me to advocate voting remain, by telling us that by merely voting to leave the UK would require an emergency budget and result in a quick recession. Both warnings proved false. It should not surprise anybody that people are not fooled, once bitten twice shy - scare tactics worked once but will not work again.

 

The most recent polling by You Gov (the only pollster to get the election result right) suggests that people who voted leave have not had their confidence shaken, that in the North of England only 34% of people want a second referendum, and that given a choice they prefer Mrs May to be doing the negotiating to Mr Corbyn.

Brexit is bound to be a difficult negotiation for the Government, but it is not in the national interest for business bodies, the opposition and MPs from within its own party to try to confuse the situation by asking it to make compromises. It only helps an EU negotiating team that would love to get us to reject Brexit by tying us to a bad deal that has to be put to a second vote.

That people voted leave is understandable, I gave up ‘remaining’ last year and now have the passion of the convert. I suspect Mrs May has too.

        



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