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Bring it on: How Britain can master the long journey out of the EU

March 30, 2017

Mark wrote the below piece following the triggering of Article 50 which appeared in today’s City AM.

So little of the frenetic energy expended since the Brexit vote last summer has focused on any strategic thinking about the type of Britain that will emerge from the EU in just two years’ time.

But there has lately been a heartening opening up by senior EU figures. The EU’s chief parliamentary negotiator, Guy Verhofstadt, has proposed as an opening salvo that UK citizens be allowed an individual opt-in to remain citizens of the EU.

In reciprocal mode, I anticipate the UK swiftly assuaging the genuine anxiety of many of those citizens from all corners of the EU who have been living and working in the UK since before 23 June about their future status. Providing this level of reassurance will also send the clearest possible signal to the world that the UK wishes to remain an outward looking, globally engaged nation and economy.

We should go further. Regardless of the course of trade negotiations, our government should make clear our intention to offer tariff-free importing rights to the EU27 and request, rather than demand, reciprocation. Free trade should begin at home and, instead of getting bogged down in negotiating complex deals about regulation and compliance, our aim should be “business as usual”.

The starting point for our new relationship with the EU will be one of regulatory parity and zero tariffs, and the EU would have to seek to impose rules and tariffs on us to change this situation. The inertia bias ought therefore to work in our favour. Similarly in sectors such as financial services, we will be in the unprecedented position of seeking a likely enhanced equivalence or mutual recognition deal with a group of nations with whose regulations we are already entirely aligned.

The UK government should also continue to make the case that our disproportionately large contribution to defence, security and intelligence should win it some concessions in the negotiations. While it has been made clear to me that the German government and others regard this expenditure as part of the UK’s Nato commitment, we indisputably live in an increasingly dangerous world.

Even if Brexit talks become rancorous, it should not be forgotten that the EU’s enemies also operate beyond continental borders. UK intelligence and security cooperation will continue regardless, but if necessary we should not rule out diverting international development funding to the Baltic States, Poland and Finland to display our resolution on mutual defence.

I have always been struck by the esprit de corps between Baltic and Nordic States over the threat posed by Russia – the UK is well placed to make common cause in the years ahead over these issues. Needless to say much the same thinking applies to counter-terrorism. The UK must commit to expenditure on this and cyber-defence for many years to come: let’s offer a down payment at the outset of the Brexit talks and trust that the goodwill engendered will deliver tangible negotiating benefits.

Back home, too many of our fellow Britons lack the skills required to command a living wage in a globalised economy. Indeed one of the reasons that Leave secured victory was the sense that modern capitalism is now skewed against the interests of many living outside London and the South East. A grittier way of expressing this is that the UK, with more functionally innumerate and illiterate adults than Norway’s overall population, lacks the nimbleness properly to compete in a post-Brexit age.

The government’s industrial strategy recognises that to make a success of life outside the EU, the UK needs a skills revolution. This entails a firm commitment to improve vocational and technical education. All too many UK school leavers and graduates are underemployed at a time when there is exceptionally high demand in the construction, hospitality and manufacturing industries and we struggle to fill vacancies for carers, computer coders and town planners.

Last autumn’s triennial OECD Programme for International Student Assessment made, once again, for sobering reading. Despite almost two decades of persistent government priority on education, the evidence points to the UK continuing to decline in relative international educational attainment. While our elite school education remains world class, the gap with the lowest achievers grows and UK teens’ performance especially in Maths and Science is worrying even compared to many EU nations, let alone the global leaders from Singapore, South Korea and Japan.

As immigration is restricted in the years ahead, UK employers may no longer have the option of importing the skills we have not yet properly developed at home. We shall only make Brexit work to our full potential with a more productive, better educated and more vocationally capable workforce. Nevertheless, this step-change in skills and training in the UK will take time. Our economy can ill afford the hiatus of losing the skills, aptitude and raw experience of EU nationals who have made the UK home over the past decade. In particular if the UK is still to thrive in research, innovation and scientific discovery, we shall need to encourage and nurture the very best talent globally.

The UK also has to play its diplomatic cards to full effect. Let’s recognise that Europe and the Eurozone are likely to be in turmoil during the course of Brexit negotiations and for years beyond. We must remain fully engaged in the affairs of our continent and be watchful for opportunities to drive reform in Europe to our benefit.

There is little appetite from others, even among acute Eurozone-sceptics in Scandinavia, Poland and the Czech Republic, to leave the EU. But the essential schism within the EU may soon be between those determined at all costs to keep the euro afloat (perhaps moving in the direction of fiscal and banking union) and non-Eurozone members. If this comes to pass, the deal the UK is able to negotiate may yet become the template that will be emulated by the Swedes, Danes and others.

The Brexit negotiation that now begins will be a mix of high politics, low cunning and strategic chess. Bring it on!