Josh Neidus is a graduate engineer at Jaguar Land Rover and founder, and is Chairman of Target Single Market.
Negotiations are a process of give and take in which both parties concede points that they deem less valuable than the concessions they receive. However, the Government’s approach to the Brexit negotiations seems to be to concede all of its points before they have even started.
Of course, there is some merit in this approach: having learnt from the mistakes of her predecessor, Theresa May seems to be taking the approach of damage limitation by under-promising on the assumption she will come back from Brussels with something to show. This is a stark contrast to David Cameron’s botched, hyperbolic negotiation that achieved very little and led to furore amongst the commentariat, ultimately leading us out of the EU.
However, this Government seems to be solely concerned by political expediency, as opposed to acting in the long-term interests of the UK. Target Single Market was established in the wake of last year’s June vote to ensure that, whilst delivering the Brexit mandate, the Government none the less ensures that economic and national interest was still at the forefront of the Article 50 process.
To that end, we still have much work to do. By accepting the referendum result, like many, I did not expect that we would have full membership of the Single Market, Eurotram or the Customs Union, but I did expect the Government to at least have all options on the table and a clear, positive vision of Britain’s post-Brexit future.
By contrast, May’s government appears bumbling, directionless and out-of-ideas before Article 50 has even been triggered. This has resulted in a non-negotiation in which we have conceded absolutely all major negotiating points.
The Single Market is the most important EU mechanism that the government should protect above any other. It is important to note that full access to the Single Market is only possible with free movement of labour, capital and goods – so the burden is on the Government to compile a negotiation framework.
In relation to the Single Market, this would most likely involve a trade-off between free movement of labour and harmonised trading in certain sectors. Put simply, Single Market negotiations would become a sliding scale between free movement and single market membership. Ignoring the immigration issue would be political suicide, but turning our back on the Single Market is economically inept: the negotiation should be a balancing act, something so far that the government has failed to grasp by trumpeting immigration control to the detriment of all other issues.
The Single Market is important because it gives UK companies access to customers in Berlin as if they were in Brighton, broadening every UK’s customer base in the process. We are highlighting four key areas that we deem strategic industries that our government should target: agricultural, automotive, financial services and life sciences. In the coming weeks we will be publishing reports into each sector, I have outlined below brief summaries of why the Single Market is vital for two of them – financial services and the automotive sector.
It is easy to underestimate the impact that financial services have on the UK economy. Of course, that in itself could be construed as not entirely positive, but the fact remains that financial services are vitally important for the UK’s prosperity. According to the City of London Corporation, financial services contribute eight per cent of GDP. Not only does the sector provide a large proportion of wealth to the UK, but also many jobs, and thus vital tax revenue. Leaving the Single Market would not only decimate one of the most important sectors to the UK, but would send it into an economic crisis not seen in a generation.
A PWC report commissioned prior to the referendum stated that up to 100,000 jobs could be lost in the event of a Hard Brexit. These jobs won’t all be those of ‘fat-cat bankers’: many will be lower paid jobs that support much of the day-to-day activities in the financial services sector – the type of jobs the Leave campaign focused on protecting.
Financial services relies on free trade with Europe to operate successfully in the UK; mechanisms such as passporting ensure that trade can happen freely. This advantage, coupled with the UK’s historical links with the US and Hong Kong, have allowed it to become the premier financial services centre in Europe. Leaving the Single Market would jeopardise this, and our European neighbours would be the largest benefactors. For example, HSBC, Europe’s largest bank, has announced that London will be losing a thousand jobs to Paris before Article 50 has even been triggered.
The UK is experiencing a renaissance in the automotive manufacturing sector. Record growth, coupled with high investment, has allowed the sector to flourish. Once the bane of government policy-making, the automotive sector has become a beacon or pride, championed by every hi-vis-wearing, hardhat-donning Cabinet Minister. Last year, the UK built 1.7 million vehicles, more than Italy and Poland combined. Yet since the vote on the 23rd June, investment has stalled. BMW, one of the largest investors in the automotive industry is being reported as placing on hold investment decisions in the UK, potentially favouring Germany as the country of choice to build the next generation Mini. This would be a body blow for Oxford and the wider economy, putting thousands of jobs at risk. Mini is the third largest automotive manufacturer in the UK behind Nissan and Jaguar Land Rover.
The automotive industry has benefited hugely from the Single Market, attracting foreign firms such as Toyota and Nissan. The attractiveness of the UK was based around the very fact that manufactures would have unfettered membership to the Single Market; this is now under threat.
The Single Market is not only critical to the industry sectors laid out above, but also every trading sector of the UK economy. Up to three million jobs are linked to the EU. It would take an incredibly irresponsible government to put that at stake, or give up on those individuals before negotiations have even begun. Our growing movement is waking up to this fact: we respect the democratic mandate that the referendum gave the Government, but this did not give it the right to surrender our economic prosperity and future.