We’re throwing away a golden opportunity

EVEN the most charitable verdict on last week’s Brexit talks in Brussels can hardly describe them as a success.

The outcome has managed to anger not just Leavers but ardent Remainers as well.

Why? Because the Prime Minister appeared to tacitly endorse the idea of extending the Brexit implementation period beyond December 2020. That, in effect, would delay Brexit by another year for no apparent gain.

There would remain a Northern Irish backstop undermining the integrity of the UK, we would have to pay billions more, and there will be no agreement on our future relationship with the EU.

This will severely challenge the Prime Minister’s statement at the Conservative Conference that austerity has ended.

The consequences of the extra costs on next week’s Budget and the nation’s finances would be immense and entirely unnecessary.

Two years ago, the British people voted to take back control and leave the EU. Any final deal must respect what people voted for: control of borders, control of laws, control of money, control of trade. All free of oversight from EU institutions.

The EU is not entitled to split up the UK. And the EU is not entitled to direct how we regulate our economy and govern ourselves after we leave. We should not allow ourselves to be bullied by the EU. Now is the time to stand up for the national interest and plot a better course.

Despite the flawed strategy to date, it is still possible to reset our path towards a proper free trade agreement. But we are running out of time, and we should not fear a ‘no deal’ outcome.

Given the EU’s continued intransigence, we should now step up such preparations.

The paradox is that the more we do, the less likely it becomes. Because if we do, the EU will strike a deal. We have many cards in our favour and the EU knows it. So do the nation states and their industrial leaders. The chief economist of Deutsche Bank, Germany’s biggest bank, has said that outside the EU ‘the UK will do just as well or better…’ – not least because outside the eurozone, we have ‘flexible exchange rates’.

In the event of no deal, our currency would adjust, making EU goods such as German cars about one third more expensive than before 2016 – leading to a drop of German car sales to the UK of about a third.

Do we really think German industry is unaware of this? We should be accelerating already planned action to improve our ports, logistics and transport to ensure UK ports can cope with delays if any EU ports become deliberately difficult about handling freight coming to or from Britain.

The UK also should be taking world-class legal advice now. We already know that any aggressive threats of discrimination against our goods and services would be illegal under World Trade Organisation rules (and indeed Article 8 of the EU’s Lisbon Treaty!)

There have been claims that planes will not fly between the UK and EU. This is extremely improbable as it would undermine the Spanish and other European tourism markets as well as Mediterranean property markets.

Furthermore, European flights would still need our airspace in

order to fly to the USA. That should be enough to focus minds on a sensible outcome. Also, the Chicago Convention on international civil aviation will still exist and need to be applied and they are hardly going to flout that.

Many of these ‘threats’ are Project Fear Mk 2 when it has become patently clear that Project Fear Mk 1 was demonstrably incorrect.

And, of course, there are many countries outside the EU waiting to make free trade deals with us.

Neither should we forget that, in the event of no deal, there are forces we can unleash to kickstart our economy.

British companies have cash reserves of £613 billion. Investment of just three per cent of that is equivalent to £18 billion, or one per cent of GDP. Getting UK companies to spend this in the next two years while Brexit takes effect would help provide a sharp increase in British growth, productivity, employment and wage levels. This would encourage UK companies to invest here rather than elsewhere.

So there is a strong case for increased investment tax incentives for the first two years after Brexit Day to encourage UK businesses to invest in Britain.

There are other taxation measures we can take to stimulate the economy.

The Annual Investment Allowance – which helps firms pay less tax when they buy assets – should be increased from the current £200,000 to £1 million to encourage greater investment in small and mediumsized businesses.

Meanwhile, a wider, time-limited system of first-year allowances for larger investments should be considered and targeted on particular sectors in line with the Government’s industrial strategy.

A brighter future needs smart regulation, not deregulation, and global standards, not EU standards, to make us more competitive. Any problems will be short-term. We should not be deterred from transforming the UK into a global trading power.

The Government is in serious danger of treating Brexit as a problem to be minimised when, properly handled, it is a golden opportunity.

It is time for our Government to seize the moment and forge a fundamental transformation of our economy and our potential for future generations.