The uncomfortable reality for those of us who support Brexit is that the response of Tory administrations to the opportunities has been piecemeal and sclerotic.
There are good excuses for the delays and zig-zags. No one could have anticipated the twin crises of the pandemic and Russia’s war on Ukraine and its impact on energy markets. But much has been self-inflicted with Tory schisms over Partygate, leadership battles and the disastrous Liz Truss interlude which exposed the UK’s frailties.
All this has allowed a narrative of despond to take hold. Enemies of Brexit seize upon the Office for Budget Responsibility projection of a potential four per cent loss of national output as if it were the holy grail. It rarely is acknowledged that it is a forecast and the OBR not infallible.
Forward thinking: The best way to counter the challenges to Brexit is to complete the job
That does not prevent critics, such as the New York Times, headlining that ‘Brexit begins to beget Bregret’. The Bregret is not Brexit but a failure to seize the moment. One of the key benefits of Brexit was to escape from Brussels’ financial regulation and create opportunity to underpin the UK’s historic role as a financial centre.
The slow passage of the Financial Services and Markets Bill has been a disservice to prosperity. As the UK has hesitated, Brussels is gearing up to challenge the City’s leadership in derivatives trading to grab a share of a £97trillion market. Instead of using London clearing, it wants European traders to use European-based facilities. Meanwhile, critics of Brexit trumpet the idea that the value of the Paris Bourse is higher than the London Stock Exchange.
Maybe, but the methodology has been challenged, takes little account of global stocks listed in London and there is little discussion as to the LSE’s emergence as a world-class data and trading power house.
The best way to counter the challenges to Brexit is to complete the job. Rishi Sunak’s desire to sort the Northern Ireland protocol could start a more co-operative era for UKEU relations. Among other things it could free up access to the EU’s £81billion of Horizon funds for science projects.
On the financial front the agreement between the Bank and HM Treasury on Solvency II, a lastminute addition to Jeremy Hunt’s budget, if properly embraced, could be a game changer.
There is up to £100billion of capital to be released from the insurance industry over the next few years. Aviva alone should have £25billion to invest in infrastructure, life sciences and other growth sectors.
Projects with reliable cash flows, which can be matched with long-term liabilities, will clearly be required.
There is no shortage of such prospective investments – from renewables to new nuclear, rail and road schemes.
University infrastructure ranging from student housing to the construction phase of research centres also could be unshackled.
Renewing Britain and galvanising the financial sector will need political willpower and the Bank and HM Treasury working together. The City has been fast to embrace new trades such as renminbi dealings, green bonds and fintech. JP Morgan has chosen Britain as the launch pad for a digitally enabled retail bank Chase. Freeing the UK up from onerous EU regulation provides a great opportunity.
Rushing the fences is never a good idea as we saw with Truss’s growth agenda. But boldness of ambition does not have to be sacrificed on the altar of caution.
