Business leaders should aim their ire at the EU

Concern about Brexit’s impact is understandable but the single market doesn’t benefit all firms

Acommon misconception about Margaret Thatcher is that she had no “industrial strategy”, and indeed actively repudiated any such notion. In fact, she practised the only form of industrial strategy that matters. Making the British economy globally competitive again – after decades of relative decline – was for her always a primary objective. Interestingly, Europe’s single market was seen as key to its realisation.

“It’s your job,” she told business leaders in 1988, “to gear yourselves up to take the opportunities which a single market of nearly 320 million people will offer… A single market without barriers – visible or invisible – giving you direct and unhindered access to the purchasing power of over 300 million of the world’s wealthiest and most prosperous people… It’s not a vision. It’s not some bureaucrat’s plan. It’s for real.”

Small wonder, then, that having risen to that challenge, many business leaders are in a state of almost apoplectic alarm that Brexit might come to deny them the “unhindered access” and “opportunities” that Thatcher promised.

With one or two notable exceptions, business elites kept quiet during the referendum campaign, fearing that any intervention from those thought of as in some way responsible for the financial crisis would prove counterproductive. Many of them now regret their cowed silence. With Brexit negotiations once again reaching a critical juncture, they are making up for it with a veritable cacophony of increasingly blood-curdling warnings.

They are right to raise the alarm. We can choose not to believe them if we like, but, on the whole, these are people who know what they are talking about. They deal with the world as it is, not as we would like it to be. Their businesses have benefited hugely from the borderless trade and integrated supply chains Europe’s single market has had to offer, and they are determined to defend a model that works for them.

But to acknowledge that the single market has undoubted benefits for the likes of Airbus, BMW and Jaguar Land Rover is not to argue that it is good for all business. There is, moreover, an element of truth in claims that the EU is little more than a corporate racket, or, to use Jeremy Corbyn’s description, “a bankers’ club”. Top-down harmonisation of the sort favoured by the EU is in practice as likely to stifle innovation and protect incumbents as promote competition. It also reflects a culturally very different attitude to free trade from our own. In Britain, we think of free trade as a celebration of differences; the EU by contrast sees it as a levelling exercise, a standardisation that, far from promoting competition and choice, seems increasingly to concentrate market power in the hands of an ever-smaller number of international industrial behemoths.

Even so, an irresponsible, politically destabilising, let’s-go-for-it, road-crash Brexit would be a most unwise approach to the problem. It is not at all helpful to have unguided missiles such as Boris Johnson repudiating everything business says. What sort of message does the Foreign Secretary think he is sending to international capital when he uses an expletive to dismiss the concerns of some of Britain’s biggest sources of employment and tax?

At the same time, however, business leaders – on both sides of the Channel – should be directing their criticism as much at Brussels as the UK Government. It is not Britain that threatens to close its borders, but the EU. It is their intransigence, not ours, that menaces the just-in-time supply chains and the deeply integrated nature of today’s European economy. The country has decided on Brexit; business needs to find a way of making it work, not conspiring with Brussels to punish Britain for wanting to change.

Rewind once more to Thatcher’s hopes for the single market. When she came to power, many parts of Britain’s manufacturing industry were slipping into the sea, laid low by unruly unions, high levels of tax, poor management and rotten quality control.

But what was really killing UK manufacturing from within was massive and persistent disruption to production – caused by industrial action either directly at the factory, or at suppliers, or at the ports. When Thatcher persuaded Japanese car companies to invest in British plants, the deal was that they would instil in British suppliers the same just-in-time management techniques and quality controls that had served them so well at home. The strategy worked. High-end British manufacturing is today some of the most productive and reliable in the world. In no small measure, it is the Japanese influence that has brought about this renaissance.

Yet the Japanese didn’t come to Britain as a destination market in itself. They came because it offered a business-friendly gateway to Europe. Holdups on borders threaten to revive the disruption to production that rendered UK manufacturing uncompetitive in the 1970s. Business is right to complain; but its quarrel should be as much with Brussels as the besieged Theresa May and the feckless Boris Johnson.