May consigns UK to slow lane by burying her head in sand

by Hugo Dixon | 06.11.2017

The prime minister is being astonishingly irresponsible in refusing to have a Cabinet discussion about what type of Brexit we should have. This is not how to run a country.

As Paul Drechsler, president of the Confederation of British Industry (CBI), said at the weekend: “I couldn’t believe that any team of people would take on a mission of this scale without considering it in detail in terms of the pros, cons, costs and benefits – nobody could embark on the biggest deal of their life without considering it in the boardroom.”

What’s the explanation for this leadership vacuum? Probably that Theresa May is so weak that she’s not prepared to face the truth that there is no good Brexit.

If we go ahead with Brexit, we’ll have three choices: cut a trade deal with the EU a bit like Norway’s; do one like Canada’s; or have no deal at all and rely on World Trade Organisation rules. All options are problematic. While a Norway style arrangement would keep us in the EU’s vast single market, we would move from being a rule maker to a rule taker. The other alternatives involve a big loss of market access and, with that, damage to our prosperity.

The prime minister perpetuates the fiction that we can have our own “bespoke” deal – keeping our market access without the obligations of EU membership. That’s her version of Boris Johnson’s “cake and eat it” approach.

May isn’t just burying her head in the sand by avoiding a Cabinet discussion on the ultimate trading relationship we want with the EU. She’s doing the same by pretending we can clinch this free trade deal (that she won’t discuss even with her colleagues) by the time we’re supposed to quit the EU in March 2019. This is poppycock.

As if that’s not enough, our prime minister is pretending that we’ll only need a two-year transition arrangement once we quit the EU to wrap up all the loose ends. It will take many more years than that to nail down, ratify and implement a free trade deal.

May’s failure to get a grip is undermining business confidence. Industry is exasperated. Investment is grinding to a halt, as Mark Carney, the Bank of England governor pointed out at the weekend.  What’s more, companies are starting to shift parts of their operations across the English Channel and Irish Sea. According to a survey by the CBI, 60% of firms will trigger contingency plans by next March if no transition deal is agreed by then.

The UK has already moved from being the fastest to the slowest growing member of the Group of Seven large industrialised nations. And this is before Brexit has even happened. Without investment, we will be stuck in the slow lane for many years to come – with low productivity, low wages and fewer opportunities for the younger generation.

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    Edited by Luke Lythgoe