Business & Finance

London Skyline for Christopher Jackson's Blog, The View From Lawrence Street

A guide to what “Brexit means Brexit” is, and a roadmap to reconciliation

In recent British political discourse there have been few more controversial and misunderstood statements than Theresa May’s position that “Brexit means Brexit”. Understanding these three words has become an obsession for business, the public and politicians. The phrase has created uncertainty, fear and anger, but the statement is much simpler than people believe. Given the importance of this issue, here is an attempt to explain it, along with a guide for how we can lower the heat in British public discourse and start to reconcile our clearly divided country.

“Brexit means Brexit” – a guide:

Theresa May has built her leadership around three key principles: free trade, inequality and immigration. For the current Prime Minister, the EU is a major barrier to the UK’s ability to sign trade deals with the world’s leading economies. The last minute panic with CETA (The Canadian free trade deal) merely re-affirms her view, while the rhetoric on the TTIP deal with the US has led the PM to conclude that the EU and US trade deal is dead. On inequality, the PM believes that the Conservative party should be the champion for addressing social inequality. She believes that Grammar Schools improve social mobility for poorer elements in UK society and she believes that large private sector firms take advantage of international tax laws to deprive countries of the tax revenue that they “should” be paying. Lastly, the PM believes that with net UK immigration running at 300,000 people per year, the number is unsustainable. This was her view as Home Secretary and she believes that it is one of three critical concerns for UK voters.

This is not an endorsement of any of these policies per se, rather a translation. If Theresa May believes that the EU cannot sign trade deals, that companies abuse trans-national legislation to evade taxes and that immigration is too high, then a number of aspects of Brexit are clear. The UK position will be to leave the EU customs union, which is the union that determines the EU’s international trade position. The UK will also seek to restrict the freedom of movement granted under the EU’s single market. Lastly, the PM will seek to reduce the ability and incentives for firms to use low tax headquarters like Ireland, Luxembourg, Holland and Lichtenstein to evade UK corporation taxes. If the EU and the PM cannot negotiate these points, then the path is clear: Theresa May believes that the UK must pursue a “Hard Brexit”.

So what is a Hard Brexit and what would it mean for EU nationals, companies and British nationals?

A Hard Brexit means that the UK would leave all aspects of the European Union as it stands today. That means leaving the single market, leaving the customs union and leaving the European Court of Justice. But again, what does that really mean? In short it means three things will change:

 

  1. Trade with Europe may become more expensive (maybe a little, maybe not at all),
  2. Living in the UK for EU nationals or living in the UK for EU nationals, may require more paperwork (or none), and,
  3. Individuals will not be able to appeal court cases beyond the UK Supreme Court.

 

The costs of trade between the UK and the EU will be determined by two elements: trade tariffs, where UK and EU companies pay a tax to sell goods into each others markets, or goods/services regulation/standards, which may force companies to change their product or to provide it in a way which makes trade more expensive. As the UK today has “equivalence” in most domestic legislation, all UK goods and services already meet EU standards and vice-versa. As such, the only cost after Brexit would come if the EU imposed a tax on trade between countries. However, as the EU and UK are members of the World Trade Organisation (WTO), this means that tariffs are limited. In many cases, the tariff cannot rise above 5%, a figure that would be absorbable by most businesses (albeit unpleasant).

For questions of residency, we already have a few “known-knowns”. The EU does not allow discrimination among member states, so while the UK can offer easier visa access to certain EU members, no EU member can offer the UK better terms than anyone else. Simply put, if the PM restricts the access for one EU country (or a few) to come to the UK, every EU country will retaliate in kind. That being the case, there is no evidence that the UK would require EU nationals to get a visa to visit the UK, nor is there much evidence to suggest that accessing work visas (or student visas) in the UK would be complicated or even hard for EU nationals. A good reference point here would be to examine the UK’s attitude to US and Canadian nationals who want to live and work in the UK.

A roadmap to reconciliation:

Clearly there are all sorts of specifics that I cannot cover in one article, but these are the broad strokes. Thus, the success of Brexit or its failure will fundamentally depend on one aspect: goodwill.

The debate around Brexit has been toxic. Instead of treating each other as fellow citizens, with valid arguments and with an equal right to express their opinions, both sides have belittled and insulted the other. This has to end. Everyone had a right to vote and the vote has to be respected. It does not matter where you live in the UK, how old you are, what your level of education is or which political party you vote for, you are no better or different than any other citizen in your country. If we fail to acknowledge this basic fact, then we will end up in the situation the US finds itself in today. Even before Donald Trump, the US political system was so polarised that cooperation was next to impossible and political gridlock has endured.

The US today illustrates what happens when one-half of society fails to trust the other. We cannot allow that to happen in the UK. Leave may have won the vote, but those who voted remain are also citizens of the country and they have a right to contribute to the discussion of what kind of Britain they would like to see outside of its current relationship today. Similarly, Remain voters need to acknowledge that every court case that they bring, every article or speech they give about a 2nd referendum and every request they make that MPs should reject Brexit, reinforces the believe of Leave voters that they cant be trusted to contribute to the Brexit discussion. Any good partnership is based on trust. Remain voters need to give leave voters the confidence that they have accepted the result and leave voters must be brave enough to trust them.

Brexit is going to be a complicated and long negotiation, on which many people will find it hard to detach their deep emotions surrounding an EU member leaving, from the practical need to find an accommodation with the EU’s largest bilateral trade partner. The UK too needs to recognise that the EU is a multifaceted creature that goes beyond the widely disliked European Commission Officials in Brussels. The British people know that they love European people, the food and the culture. Even Nigel Farage, the bogeyman of the Leave campaign, has said that he “loves Europe and the European people”, he has a German wife and speaks German. This distinction between the EU as a political institution and the EU as a grouping of people and states is essential and the current messaging from the UK government is wrong.

Let me finish with a few words to the two most under-represented groups in the entire discussion, those EU nationals who work, study and live in the UK and those British expats who live, work and study in Europe. It is true that 52% of the British electorate voted for Brexit, but not all of those 52% of voted to turn away from the world, to end immigration, to demean, belittle and insult people who have simply chosen to live their life’s in a different place from where they were born. I am immensely proud of my friends from across the world that have come to the UK and made it their home. We are richer for your presence here. I also know from my own experience and those experiences of my family members, that our lives were made richer by being able to spend time living abroad. Many people are questioning their place in the UK today and many are deciding that it is not the home they thought it was. But whatever you decide to do, as a Brexit voter I just want to say, I will always support your right to live here and call this your home. And I know I am not alone among Brexit voters either.

We stand at a crossroads dear friends. We can stand together, work together, respect each other and trust each other, or we will fail. As the old cliché goes, United we stand, divided we fall.

 

Christopher Jackson The View from Lawrence Street

Christopher Jackson graduated from York University with a 1st Class Honours Degree in Politics with International Relations, BA and is currently a Research Assistant at Bologna Institute for Policy Research (BIPR) at Johns Hopkins University SAIS in Europe.

Click HERE to read Christopher’s impressive curriculum vitae on Linkedin.com

Please note that the views expressed in this Blog are those of the author and do not necessarily reflect the views of The Vintage Magazine.

 

 
Wednesday, November 9th, 2016