Evidence, not ideology, must guide our future Brexit policy
If 2017 was the year of discussion, 2018 must be the year of decisive action. Urgency, flexibility and clarity must be at the core of official decision-making, both at home and in the EU.
You could argue that January’s customary blues have been counterbalanced by a positive economic outlook. Such optimism is, however, tinged with apprehension as two years of Brexit uncertainty start to bite for many businesses.
This year must be – if nothing else – a year of hard choices based on evidence and not political ideology.
The CBI has set out its new vision for a good Brexit deal. A plan where evidence trumps ideology and which calls for creativity and flexibility from negotiators on both sides.
We need a transition deal agreed by the end of March and, crucially, the issue of trade talks cannot be indefinitely deferred any longer. A heads of terms on the outline of the final deal should be signed with the European Union by October, giving firms the clarity they so urgently need.
A good Brexit deal is within our grasp but this will only become reality if political posturing takes a back seat. The new deal must reflect the size of our economy and its value as a marketplace on the shore of Europe. This deal cannot be an offthe-shelf replica of the Canadian or Norwegian trade deal with the EU.
Studies suggest a Canada-type deal will result in the UK’s GDP suffering 2%-5% negative growth and its limited scope for services is a grave threat for an economy which is 80% services-based.
Similarly, the Norwegian model’s lower level of control would become a political problem – the UK would need to accept the four freedoms and pay in substantially to the EU budget.
So, what is left after Norway and Canada? Well, in seeking the best final deal, the CBI is suggesting negotiators on both sides adopt one simple principle – let’s start with the rulebook we already share and build from there.
These rules have been 40 years in the making and support millions of jobs and communities across Europe. A flexible solution of this kind could preserve many benefits of barrier-free access to the Single Market while respecting the referendum call for more control – meeting the needs of business and politicians on both sides of the Channel.
As the First Minister’s trip to Dublin powerfully illustrated earlier this week, there remains a particularly large thorn in Brexit’s side as long as the issue of Northern Ireland remains unresolved and politically sensitive.
Until we find an alternative that works, a customs union is part of a practical, real-world solution to provide clarity for citizens and boost business confidence over the months ahead.
Remaining a member of a customs union for as long as it serves us to do so is consistent with the result of the referendum and would preserve economic and social prosperity on both sides of the negotiating table.
As we look closer to home, the Welsh Government is working hard to speak up for the interests of the Welsh economy. The launch of the Welsh Government’s Brexit White Paper on trade is one of the latest in a line of reports covering a range of business-critical issues.
When you take a closer look, what is revealed is a picture of business and the Welsh Government closely aligned on the CBI’s six Brexit priorities.
First, the CBI wants a barrier-free relationship with our largest, closest and most important trading partners.
The Welsh Government’s White Paper, Securing Wales’ Future, makes clear that any significant reduction in access to the Single Market will be damaging, and the greater the reduction, the worse the consequences will be in terms of reduced or negative growth.
Secondly, the CBI has called for a clear plan for regulation that gives certainty in the short term and in the long term balances influence, access and opportunity.
The newly published Welsh Government trade White Paper powerfully makes the case that technical barriers to trade have already been overcome by regulatory convergence and that convergence should remain in place.
It also recommends that the right transition deal is one that delivers continuity and clarity for business, with no new tariff or non-tariff barriers.
Thirdly, the CBI wants a migration system that allows businesses to access the skills and labour they need to deliver growth.
The Welsh Government calls for a system that works for the different sectors of our economy, ensuring businesses are able to meet their recruitment needs where it has been demonstrated the domestic labour market is insufficient.
The Welsh Government also goes one step further and calls for a “spatially-differentiated approach that would be more fitting to Wales’ needs and interests”.
A separate Welsh migration system controlled by Wales would be quite a departure from what we have seen in the past.
Fourth, the CBI wants a focus on global economic relationships with the business community at its heart.
The Welsh Government’s White Paper on trade rightly points to the highly integrated nature of the Welsh and UK economies and the unlikelihood that in the short term free trade deals with other countries would compensate for the loss of full and unfettered access to the Single Market. It is unconvinced that future trade deals could replace the current relationship with the EU.
Fifth, the CBI believes an approach that protects the social and economic benefits of EU funding is vital.
The Welsh Government’s White Paper entitled Regional Investment In Wales calls for continued devolved funding and regional investment of at least the level Wales currently receives from the EU.
While we may disagree on the detail, the Welsh Government is right to say regional disparities remain a challenge which can only be addressed by setting a national strategy underpinned by regionally designed and managed action plans.
Finally, the CBI wants a smooth exit while avoiding a cliff edge that causes disruption.
It is fair to say the Welsh Government have called, from the start, for a period of transition that delivers stability for business. They also want a customs union arrangement which mimics the status quo to the greatest extent possible.
So an alarming degree of consensus seems to have broken out. The next few months will be critical to see if the vision outlined by business and the Welsh Government can be delivered. Ian Price is director of CBI Wales.