Si­mon Wolf­son

It’s a myth that Bri­tain’s de­par­ture from the Eu­ro­pean Union will hurt big busi­nesses like mine

The Sunday Telegraph - - Front page - SI­MON WOLF­SON at tele­graph.co.uk/opin­ion READ MORE

It’s in the over­whelm­ing in­ter­ests of both the UK and EU that Brexit is care­fully man­aged, ac­com­pa­nied by a tran­si­tion pe­riod and a free trade agree­ment. But the terms of our de­par­ture will not make or break our eco­nomic des­tiny.

The com­pany I work for, Next, is one of the UK’s largest traders. We move over £4 bil­lion of stock around the globe and cross most of the world’s cus­toms bor­ders. We have taken steps to en­sure we have the ad­min­is­tra­tive sys­tems and le­gal struc­tures needed to al­low the busi­ness to con­tinue to run smoothly – deal or no deal.

We have set up bonded ware­houses, which al­low us to de­fer cus­toms pay­ments un­til goods are dis­trib­uted to shops and cus­tomers. That means goods can move across cus­toms bor­ders and be­tween bonded fa­cil­i­ties, without in­cur­ring du­ties.

Our prepa­ra­tions mean there will be lit­tle or no di­rect im­pact on our trad­ing op­er­a­tions or costs, even from no deal Brexit. But there are two caveats. First, tar­iffs on EU im­ports rep­re­sent a real threat to con­sumer costs. In Novem­ber, I hope Philip Ham­mond will con­firm that Brexit will not be used as an ex­cuse to raise cus­toms rev­enues. This would de­liver busi­ness cer­tainty and al­low con­sumers to breathe a sigh of relief. Re­bal­anc­ing tar­iffs, us­ing the in­creased rev­enues from EU goods to re­duce over­all tar­iff rates, would en­sure con­sumers are no worse off.

Sec­ond, dis­rup­tion at our ports is the sin­gle big­gest threat Brexit poses to our econ­omy. It is mit­i­ga­ble and govern­ment should be tack­ling this chal­lenge with vigour. There is a su­per­sti­tious re­luc­tance to earnestly pre­pare for no deal. It is as if of­fi­cials fear that, by pre­par­ing for it, they might some­how make no deal hap­pen.

The mea­sures mooted at present to keep ports mov­ing are es­sen­tially try­ing to per­form to­day’s pro­ce­dures in greater vol­ume. In­stead, the Govern­ment needs to re­form cus­toms pro­ce­dures, re­mov­ing work from our ports that could be done else­where.

Un­like the col­lec­tion of cus­toms at ports, VAT is not col­lected by of­fi­cials stand­ing at our tills. We pay VAT through monthly self-assess­ment and Govern­ment trusts busi­ness to col­lect £125 bil­lion in this way. Surely we can col­lect £3.5 bil­lion of cus­toms rev­enue in the same way? This in­no­va­tion, along with other mea­sures, could rad­i­cally al­le­vi­ate pres­sure on ports.

Next’s out­look is not nec­es­sar­ily rep­re­sen­ta­tive of the chal­lenges other trad­ing busi­nesses face. But our assess­ment is im­por­tant as very few com­pa­nies have pub­lished such an anal­y­sis. And it tal­lies with a new macroe­co­nomic study.

Open Europe’s anal­y­sis of the macroe­co­nomic ef­fects of no deal re­veals that over the medium term leav­ing the EU without a trade deal would only have a small cost to the UK, equiv­a­lent to an an­nual drag on growth of 0.17% up to 2030. The re­port echoes stud­ies and com­ments from The LSE, PWC and OBR.

The eco­nomic drag could be re­duced fur­ther to an in­signif­i­cant av­er­age 0.04% per an­num if the Govern­ment took max­i­mum steps to re­duce tar­iffs on global trade and boost trade in ser­vices.

Open Europe found that the costs of no deal are much milder than is gen­er­ally as­sumed. Brexit – with or without a deal – is very un­likely to be the de­ter­min­ing fac­tor for our econ­omy’s growth.

There is sim­ply no re­la­tion­ship be­tween the cold num­bers of neu­tral eco­nomic anal­y­sis and the rhetoric of those who ar­gue that Brexit will make a dra­matic dif­fer­ence to Bri­tain’s growth tra­jec­tory ei­ther way.

Brexit is sim­ply not the eco­nom­i­cally ex­is­ten­tial event im­plied by fevered po­lit­i­cal de­bate and me­dia hype. The san­guine anal­y­sis de­liv­ered by Next was re­ported by one lead­ing wire ser­vice with the scream­ing head­line “No deal Brexit brings its own hell to shop­pers”. We said noth­ing of the sort.

No deal is not ideal and not my pre­ferred out­come. But it is not eco­nomic Ar­maged­don.

Poor prepa­ra­tion could make Brexit very un­com­fort­able in the short term. In the long run it will be the de­ci­sions we take about hous­ing, trade, im­mi­gra­tion, reg­u­la­tion, health and in­fra­struc­ture that will de­ter­mine our eco­nomic des­tiny.

We need to spend less time squab­bling over the shape of Brexit. It would be bet­ter spent pre­par­ing the coun­try for life be­yond the EU ad­dress­ing the pol­icy is­sues that will de­ter­mine our na­tion’s eco­nomic fu­ture and place in the world.

Lord Wolf­son of Ap­s­ley Guise is CEO of Next and chair­man of Open Europe

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