The Chancellor, Philip Hammond, finds himself at a unique moment in time to influence Britain’s future prosperity, given that his latitude for action is on a higher plain than Chancellors have enjoyed for the last forty years in the context of the scope which Brexit affords.
Hammond is notoriously cautious and appears wedded to salvaging as much as what we have at present as possible from what he perceives to be the wreckage of the referendum vote. This is the same prism as organisations like the CBI and the Bank of England are viewing Brexit.
For them and the Treasury, the UK would be insane to adopt WTO rules of trade. After all, WTO would condemn us to the freedom of making our own trade arrangements around the world, where 90% of future growth will take place. Of course, most of the world operates on these rules but they would argue that we mustn’t allow this to influence us.
We would also have the dangerous ability to be able to unilaterally do away with EU-imposed tariffs, thus reducing the cost of food, clothing and footwear by an average of around 20%. This would have the terrible danger of boosting the economy by 2% of GDP all in one go, far too heady a brew, and also of helping the poor, which can never be a good thing.
On top of all this, we might get carried away with deregulation, which would be like a tax cut on business, equivalent to a further boost of 2% of GDP. Far too rich for our fragile (but robustly growing) economy.
To read John Longworth’s piece for BrexitCentral in full, click here.