Cambridge, the City of London and the UK need freedom to trade, to invest and to provide services in the European market.
I recently came across some notes I made some months ago of questions I thought I did not know the answers to, with regard to Brexit. These were simple things like “how would the land border with Ireland be policed, what would happen to farm trade, would we encourage a break-up of the rest of the EU and could we participate in the TTIP?”
It became obvious after June 23rd that I was not alone in having no answers to these questions, but that no-one on the Brexit side had asked them, let alone agreed what to do about them. As the government and opposition competed to fall apart in the shock of losing, it became obvious that not only had those campaigning for an Exit no idea where the door they so desperately wanted to go thorough led, as soon as the door opened they started squabbling about whether to go through now or later, to go left or right, or perhaps just to stand just outside.
If we take it as irreversible that we have to go (and thankfully the idea that 18m people can decide to rip up the closely debated work on dispute resolution between European Nations developed over the last 60 years has somewhat discredited referenda) then what is the direction we should go in and how do we get there?
Where to now?
At risk of being ignored as part of the liberal intellectual elite, I maintain that we should listen to experts, we should learn from history and we should make considered decisions based on evidence. That the single biggest contribution to the world’s prosperity is free trade is indisputable. That we as a nation are wholly and completed dependent on international trade to exist, let alone to prosper, is equally indisputable outside a lunatic asylum, or possibly a UKIP meeting. Therefore it is axiomatic that our first consideration going forward must be to try to keep free trade, particularly with our biggest market, the EU.
Similarly indisputable is that it is services we as a nation can provide – and that rapidly leads to the conclusion that Freedom of Services is absolutely essential. Not only hundreds of thousands of jobs but billions of tax revenues will be lost if the City of London loses banking, insurance, shipping, auction houses, foreign exchange – all areas where we lead the world – to Switzerland or Luxembourg. Not quite so obvious, but linked to the first two, is Freedom of Capital – it is our liberal attitude to inward investment which brings the Japanese, Chinese and Indian firms into the UK rather than into continental Europe, and if the companies who put their European base in the UK cannot freely export to the continent no amount of state aid or subsidy will keep them here.
Cambridge University needs more than this though – it needs to stay part of the pan-European network of research and study which provides not only the funding mechanism for much of Cambridge science but also the intellectual exchange and common projects the EU sponsors. Israel pays to belong to this network – we should too.
Save what we can
I believe June 23rd was a profound and stupid mistake – but we are where we are and we need to make the best of it. The comparison I make is with the battle of Saratoga, which led to Adam Smith’s comment on there being a deal of ruin in a nation. We recovered from the loss then and some might argue ended up in a better place by having two separate groups of English speaking countries.
In 1777 the UK had for 100 years been in a political, economic and currency Union with what is now the United States, and although it was their decision to leave and most of the liberal elite supported them in doing so, the prospect of losing free access to our trading partners was as terrifying for UK business then as it is today. But although it was costly at the time and probably delayed the industrial revolution by a couple of decades on both sides of the Atlantic, today we can see the boost it gave to liberal democracy and the freedom it gave to North American expansion ultimately worked to our advantage.
This leads me to think it is not the loss of the referendum which matters, it is what we do next. We cannot sit back and say in 20 years’ time the old people who voted nearly two to one for leave will be replaced by 18 to 24 year olds who voted three to one to remain, or even that if the Labour Party had a leader, its traditional voters might not have provided the whole of the margin to go. We may enjoy poking fun at Brexit or Gove but saying they were dangerous fools who led half of Tory voters astray gets us nowhere.
It is the shape of the new agreement with the EU we need to work on and we can influence that. For instance, I am saying that for the City the essentials are Freedom of Services, Freedom of Establishment and Freedom of Capital and that if we can negotiate those three we can live without Freedom of Movement by having offices in other countries. I have said that I believe if we paid twice our current contribution to obtain that, the extra tax take to the Revenue would still pay for it several times over.
A National Council
I believe there is a large parliamentary majority for adherence to the EEA and that therefore, if we push for a National Council with a representative from each political party in the Commons to decide what the top ten objectives should be for the exit negotiations, we are likely on any conceivable cost benefit analysis to end up with a sensible trade agreement. When the top ten objectives were agreed we should then have a general election and any party which was against the proposed settlement could put its alternatives into a manifesto, but I would anticipate the dynamics would push the main parties towards a consensus endorsed by the National Council. If I am right then in a little over a year’s time we could be in the EEA.
Conclusion: Politics is too important to be left to politicians
So what I take from the Brexit win is that there is a difference with the battle of Saratoga.
That battle effectively ended the war – this was a lost battle but the war must go on. Cambridge, the City of London and the UK need freedom to trade, to invest and to provide services in the European market. Cambridge as a University needs free intellectual flow to participate in pan-European research, and could not survive if it cut itself off from the international exchange of ideas. I believe the vote was not the end of the world – we could achieve all this – but if good is going to come out of it all of us need to make sure we succeed in this. I had been very encouraged recently to hear not only that lots of people were applying for Irish or Austrian passports but also that they were planning to join either the Labour or the Conservative party to participate in the leadership elections. I encourage everyone to do the same – Brexit has proved politics is too important to be left to politicians.
This article was published in the Cambridge Business Magazine - August 2016 Issue 56