The result of the referendum on Britain’s membership of the European Union was the beginning of a new fight for policymakers to shape a new future for the nation. Yet today, a lack of vision will cause Britain to fail to adjust to the realities of a new relationship with the rest of the world. Policy must begin to be shaped now if the UK is to seamlessly transition out of the EU.
The government is currently locked into the second stage of negotiations with the EU which will focus on Britain’s future trading relationship. Prime minister Theresa May has outlined her redlines for Brexit which are: no free movement, no European Court of Justice jurisdiction, no membership of the single market and customs union and reduced payments into the EU budget.
The result of these constraints means that it is likely the UK will get a trade relationship similar to Canada’s CETA agreement – perhaps improved to cover more goods and services. This, of course, won’t cover Britain’s most important sector: financial services. Whilst the government should do their best to protect the city, it will kick the government into creating policy that boosts the output for the rest of Britain, not just the south-east.
Perhaps the most unlikely place to look for advice is Asia. With several special economic zones located across China, India, South Korea and Bangladesh, these regions have trade policy which makes them particularly lucrative for business.
The elimination of trade barriers with business incentives, such as lower corporation tax and subsidies, would make areas such as the north-east attractive to invest in. This isn’t as unlikely as it sounds, with the Times reporting that the area surrounding Teesport, near Middlesbrough, could be made into a “Singapore-on-Tees”. This would be hugely advantageous for the region. Long in decline, with structural unemployment high, quality manufacturing jobs would generate local multiplier effects for the entire region, far wider than the SEZ.
There is no reason why this would be limited to solely the north-east either, these could be implemented across the country in order to increase foreign direct investment.
This would not be a race to the bottom bargain basement economic move, as Jeremy Corbyn has said in the past. Such a re-balancing of the economy is likely to reduce inequality, not increase it, so why not support it? Outside of financial services, Britain should look for sectors where it has a comparative advantage.
One of Britain’s larger sectors, particularly in the north-east, is car manufacturing. A special economic zone would reduce a firm’s costs of production, make it cheaper to produce vehicles and therefore secure further investment into car manufacturing. Britain can’t compete with nations like China on the cost of smaller mass produced items but it can compete when producing high quality, high value items.
If the economy is to be readjusted to use less imported labour and produce more finished goods, workers are necessary. The first step the government should take is recognising that not every young person in the country will want to go on to university to study for a degree. The majority of political debate on education policy revolves around the cost of university tuition, but it shouldn’t.
A large proportion of students will go on to leave school at 18 – the government should look at increasing its provision of apprenticeships, where students get work experience, a salary and a qualification in their chosen field of work.
The production of a wider labour force skilled in working in construction and industry would be far more suitable in the future, after Brexit occurs. A greater educated workforce in advanced manufacturing and construction skills will also go a long way in improving the abysmal productivity at present.
Ultimately the decision to leave the European Union will not prove to be the land of milk and honey that had been promised, but if the government is going to insist on drawing red lines for itself, then it better get real in sorting out the issues it will cause. These are just some ways they can do this.
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