Britain's economy is set to boom and become the largest in Europe - because of Brexit
28 February 2019
Clear-sighted, grown-up analysis shows the economic doom-mongering is wrong
The public finances are on the mend, recording a healthy surplus in January on booming tax receipts. Employment is at record levels (32.6 million), with real wage growth at a two-year high. Despite a global slowdown, Britain expanded 1.4 per cent last year, recording just 4 per cent unemployment. Yet Germany and France are on the brink of recession, the Italian economy is contracting and eurozone joblessness is twice as high.
The UK has economic problems – and let no-one say we don’t hear about them, given the relentless drumbeat of anti-Brexit media negativity. Just as the economy held up after the 2016 referendum, though – belying Treasury warnings of “an immediate and profound economic shock” – there are signs of defiant economic strength once more and confidence in our long-term future.
Norway’s $1 trillion (£753 billion) sovereign wealth fund, among the world’s most respected investors, has just confirmed it will boost its UK holdings.
“Over time, our UK allocation will increase,” said Yngve Slyngstad, the Norwegian Fund’s CEO.
“With our 30-year plus time horizon, current political discussions don’t change our view,” he added, reaffirming his commitment to Britain even in the case of a “no-deal” Brexit.
This kind of clear-sighted, grown-up analysis from professionals contrasts starkly with endless doom-mongering we get from subsidy-hungry politicos at the CBI. It’s precisely because Britain will thrive after Brexit that we attracted record foreign direct investment last year, beating the US, with only China attracting more. Even British start-ups raised almost £8 billion in venture capital during 2018 – some 70 per cent more than their French and Germany counterparts.
Boeing has opened its first manufacturing plant in Europe – in Sheffield. Technology-driven investment is piling in – not just to London but to Manchester and the North East too. And, as Brexit-bashing stories about planes not flying are trumped by reality, investors from China to the Middle East are flocking to a country just judged by Forbes magazine as the “best place in the world to do business” for the second year in a row.
In October 2018, Boeing opened a production facility in Sheffield - the company’s first manufacturing site in Europe
Yes, overseas investors are taking advantage of the weaker pound, which makes UK assets look attractive. But that’s how exchange rates work – which is why Europe’s monetary union is so crippling for many of its members.
And there is far more that makes Britain attractive than temporary good value. Our relatively “young” demography means the UK is on course to outstrip Germany, becoming Europe’s biggest economy.
The UK boasts one of the world’s top three universities across 34 out of 48 subject areas, according to an authoritative new survey. There are seven British universities in the world’s top-40 – and not a single EU-based institution that isn’t in the UK.
With our political classes making a meal of Brexit, on-going uncertainty is hindering domestic investment. Leaving the EU under such circumstances is far from ideal. Yet once the storm clouds have passed and we’ve safely left, Britain will stand out as an even more attractive destination – not least compared to a eurozone made up of member states increasingly prone to economic incoherence and political extremes.
Since June 2016, we have obsessed over the procedural mechanics of leaving the EU. What’s needed now is an even more intense focus on what really counts – the actual policies we should implement once Westminster has regained control over Britain’s laws, borders, money and trade.
Freed from EU “structural fund” restrictions, there is huge scope for a much more effective UK regional policy, boosting growth across Britain. Closing the productivity gap between the South East and elsewhere means more regional infrastructure spending – and I’d introduce infrastructure bonds to channel institutional savings (including pension funds) into revenue-generating projects.
A dozen low-tax UK “free ports” – stymied under EU rules – would help spread wealth across the country, as would post-Brexit agriculture and fishing policies, shifting subsidies towards smaller farmers while reclaiming UK fishing grounds. Our sovereign industrial policy should avoid “picking winners”, and instead be based on low and simple personal and business taxation, world-class transport and broadband connectivity, access to fast-growing international export markets and, above all, a steady supply of skilled and unskilled labour.
Skills must be central to the UK’s post-Brexit policy mix. Securing a high-wage, high-productivity economy means putting vocational training at the heart of government – with its own Cabinet position. Brexit need not mean an erosion of workers’ rights and a regulatory race to the bottom – and, despite scaremongering, I don’t believe it will, not least as our own Parliament will be in charge.
Since 2016, our political leaders have been largely silent on the opportunities provided by Brexit. Buoyed by the world’s confidence in Britain, we must now show confidence in our decision to leave and in ourselves.