The Leaver: Roger Bootle, Founder and CEO, Capital Economics
Brexit is about both economic and political issues, but I think it is absolutely vital to realise that the political aspect of this is far more important.
That is why those manufacturers who bleat on and complain very loudly about the damage Brexit will do to their integrated supply chains just don’t get the point. There is more to a great country than integrated supply chains. The issue is about the ‘we’ question. Who are we, and how do we want to be governed? The truth of the matter is that the British people never wanted close alignment with, or integration with, the countries of Europe, let alone political union. But as the years rolled by it became obvious the project was deepening. It was no surprise, it was there in the Treaty of Rome right from the beginning.
The forces pushing towards ever closer integration – an EU army, fiscal union – make sense for those that want them. But the UK would never have signed up to those and would have found it difficult to stand aside once they were introduced.
The EU made a major mistake when it contemplated the extension of membership to the former communist countries of the east. They were right to do this: history will see it as the EU’s single greatest contribution, to act as a receiving house for the refugee countries from communism. The mistake was not to rethink the nature of the union. What works for six countries in Western Europe with high living standards and GDP, does not work for 28, with such diverse characteristics. That is the source of the immigration debate.
The economic aspect is subsidiary to this. The EU’s economic record over the last three decades is poor in comparison with other developed countries. It didn’t used to be true, which is why we joined it in the first place. Why has it been so bad? Bad institutions. Silly objectives. The worst has been the euro, which I regard as the greatest self-inflicted wound in economic history.
I supported Brexit because I thought leaving would give us back our self-government and in the process the quality of our political debate would improve, and it would restore and reinvigorate our democracy. And from that would come a series of opportunities to make good economic decisions. We will be out of the CAP [Common Agricultural Policy], the fisheries policy and negotiating our own free trade agreements. Politics first, then economics. Though I didn’t anticipate quite how incompetent this government would be and the stupidity of its negotiating position.
I don’t think Brexit is the most important issue facing Britain. Nor do I think that the British economy in 10 to 20 years’ time will be defined uniquely by whether we have left the EU or remained in it. I can see a perfectly bright future for Britain both within or without.
Overall, I think that Brexit will be absolutely fine for financial services. We had exactly the same debate about the euro. Yes, the continentals are trying to steal business, that is inevitable.
Frankfurt is the leading competitor, shimmering like Croydon. But London is in a completely different league from these places, and the fact that the Europeans can’t decide which is going to be the replacement centre is going to help us. I would be more worried if everyone was heading to one place, but they are not.
Loss of passporting will be an issue for some parts of the City’s business, but then I think we will gain in other ways, for example by having less regulation, particularly if the EU starts to regulate financial services even more. Any whiff of a transactions tax on the continent for example would see all those firms who have moved business abroad come rushing back.
The loss of passporting is not nothing, but the scale of the predicted job losses and relocations has decreased massively. The truth is the City has grown up on workarounds. Some business will move elsewhere, large parts will remain unaffected.
Looking to the long-term, I think the big issue is: how does Europe do in relation to the rest of the world? One of the biggest problems I have with the EU is that I think it is largely responsible for European failure. I am quite pro-European, I have allegiance to European values. My problem is with the EU.
I think that if the EU doesn’t break up, and there is a fair chance it might, we will get continued European decline. The most important question facing the City will be the same as that facing the rest of this country, that is how well are we going to plug in to those parts of the world that are growing? That will completely overwhelm the loss of a few jobs to Frankfurt, Paris or wherever.
The Remainer: Gina Miller, Founding Partner, SCM Direct
Nobody thought Brexit would happen. But Brexit was not a moment, it was about successive governments failing in their domestic policy and blaming the EU. The EU became a whipping post.
At the time it was a decision to mend the Conservative party. It was an internal thing, it was nothing to do with making things better for the people of this country.
Because we started from that point, the referendum was won on promises that were hard to deliver, on a very shallow understanding of how we had integrated ourselves for 44 years.
We had intertwined every part of our lives in that time. We had made decisions about the way our country works. We decided that we would not have warehouses, we would sell our docks for luxury flats, warehouses outside towns became shopping centres or business parks because we didn’t have to hold products. The 142,000 small businesses that only export to the EU could do so with no barriers and didn’t need to employ anyone with understanding of trade agreements.
I didn’t realise that so many of our institutions were in such a state that Brexit could be the last straw. We have forgotten to look after our industries and our country. So, I am thankful for people who voted leave, because they have shone a light on that. We cannot ignore those political deficits going forward.
We operated differently, and that is what we are now trying to understand. The politicians are having to work out how to take an egg out of an omelette.
While it is easy to say we should take back control, what are we taking back control of? Somewhere between 11 and 13 per cent of our legislation comes from the EU. Which of those rules do you want to get rid of? Most of it, our civil servants and lawyers have helped to draw up and implement.
If we are going to manage an exit when we have absolutely no certainty that any of the options on the table will get parliamentary approval, because everyone is so entrenched, how do we then get through the raft of legislation we need for any of the options on the table, even “no deal”. It is legislatively impossible.
We are in utter chaos, total uncertainty. Part of the problem is that nothing is black and white. I voted to remain, on balance. We are where we are because people are not able to talk to each other.
I didn’t realise how divided the country was, and how entrenched attitudes were just beneath the surface. I have had to deal with racism and sexism that I didn’t know was still here. Being a woman of colour, I have been told that I had no right to speak out, that I am not bright enough. I came to the UK because of its tolerance, so that saddens me hugely.
Internationally, we couldn’t have made Brexit happen at a worse possible time, as the geopolitical tectonic plates are shifting. There are seismic changes going on at the same time as we are trying to enact Brexit.
The instability and ripple effects of Brexit could have impacts on institutions from the WTO, to NATO, to Russia, to trade deals, to the way our wars are fought in the future. I worry that too many politicians and people in the UK, on either side, are basically worrying about the fluff in their tummy buttons rather than looking at what is occurring on the global stage and the threats we have coming our way, from the environment, to technology, to the internet and what that can do to destabilise democracy around the world. We are not tackling the big issues. I think it is shameful that the conversations around Brexit are so shallow, so short sighted, and so irresponsible.
We have a paralysis in parliament. Just look back to the Queen’s speech in 2017 and the legislative agenda we should be going through. Where is it? We don’t talk about anything other than Brexit.
I don’t think a huge amount will happen to financial services overnight. It will change, it will morph, but it won’t happen overnight. I actually think the threat of a Labour government under Jeremey Corbyn is more of a threat to our industry than Brexit, so I hope we don’t end up with an election.
As an industry, we have been pretty bad at keeping up with the trends that are a threat to our sector. Be it passive ETF growth to active managers, calls for greater transparency, profits margins, the threat of technology, there are other threats, not just Brexit.
But the idea that as a country we are not welcoming to EU citizens is damaging. We have a lot of them working in the City, and I speak to recruiters who say they are finding it very difficult. A lot of our programmers come from Europe, for example.
I do worry about the UK’s reputation. I think Britain has always been seen as being reasonable, clear headed and tolerant, but now everyone is asking what has happened to us. It is a shame the damage we have done.
This is a summary of a debate, hosted by SGG Group, between Gina Miller and Roger Bootle which was held in London on January 28
