‘Project After’ must be rolled out now
We will cut taxes, slash tariffs and potentially relax labour and competition laws. The Government, we learned this week, has drawn up secret plans for a no-deal Brexit dubbed “Project After”. A whole range of emergency measures have been drawn up behind the scenes to turbocharge the UK’S competitiveness if we crash out of the European Union next month.
But hold on. Even by the standards of the Treasury and the rest of the Whitehall mandarins isn’t that a bit odd? Shouldn’t “Project After” be “Project Now”? If there is a secret recipe for boosting the country’s competitiveness surely we should be implementing it anyway? After all, why wait until we crash out of the EU? If we can make our economy work better, we should crack on with it.
The clock is ticking relentlessly toward our departure from the EU and there is still no sign of a deal being agreed that can muster a majority in Parliament. That, of course, may change. Brussels may find at the last moment that it is not that bothered about Ireland after all, or Jeremy Corbyn may decide to get the deal passed to save himself the hassle of dealing with it if he ever gets to Number 10, or the Tory backbenchers may blink and pass it anyway. Right now, anything could happen.
One thing is clear, however. With every day that passes the chances of a no-deal Brexit keep on rising. It is perfectly proper, therefore, that the Government has, alongside measures to keep the ports open, and make sure trade runs as smoothly as possible, started thinking about what it will do to keep the economy on track through what could be a very chaotic and difficult few months. So what might we do in that situation? The so-called “Doomsday” measures on the government’s list include big cuts to corporation taxes, and slashing VAT alongside scrapping a whole range of tariffs. At one stage the list included a radical freeing up of employment and competition laws, but that was overruled on the ground that Brexit is not meant to be about slashing the rights of workers. But a stimulus package can certainly be expected.
New systems will be needed, and there may well be some tariff barriers, and all that will cost money. At the same time disruptions to supply chains, job losses, cancelled investment, and potentially even sporadic shortages, may well hit consumer confidence and demand. It won’t be a disaster – the economy has shocks all the time, both good and bad – but it will be tricky.
“Project After” perfectly sensibly aims to counteract that. Businesses will face some extra costs, but if corporation tax is cut that will largely compensate them, as well as providing a good reason for staying in the UK once we aren’t in the single market anymore. Scrapping tariffs, at least on our side, will ease trade. And a cut in VAT will put money back in people’s pockets, and stimulate demand, through what may prove a testing few months. Sure, it will cost the Treasury some money, but the public finances are back in respectable shape. The important question, however, is this. Why don’t we do it anyway? Of course, there may be some parts of the “Project After” master plan that depend on what kind of exit deal we negotiate with the EU. Tariffs are the obvious example. But most of the planned policies we can implement whether we are in or out and whether there is a deal or not.
At the very least, the Treasury should be modelling that. It has run out endless scenarios for Brexit. It should run some projections for “Project After” and make them public. Model a corporation tax rate of 10pc, an entrepreneur’s rate of capital gains tax of zero per cent, and a cut in VAT back down to 15pc and see what came out. My guess is we’d have the fastest growing economy in Europe. More importantly, our growth rate five years out from implementing “Project After” may well be superior to doing a deal, and certainly a lot better than staying in the EU. It is great that the Treasury is finally starting to recognise there are some advantages to leaving and not just problems. But if the plan is workable, it is bonkers not to implement it right away.
‘If there is a secret recipe for boosting the UK surely we should be doing it anyway?’