The City must prepare for an £135bn per year Brexit boost

IN 1553, London merchants funded a naval expedition to China via the North East passage. It got trapped in the ice in Russia’s White Sea and was forced to travel overland to Moscow where Ivan the Terrible granted it exclusive trading rights.

Monday 21 August 2017 1:03am 

David Blake

Professor David Blake is a member of Economists for Free Trade.

Source: Getty

The group returned to London to set up the Muscovy Company. This became the model for future trading ventures in Africa, the Levant, Canada, the East Indies, Virginia and the Caribbean. In less than 100 years, the UK became the most outward trading nation in the world.

London was transformed from a small European trading centre into a global financial hub.

It is this spirit of global free trade that the UK can now rediscover by combining the exit from the EU’s restrictive single market and customs union with opening up our economy to the positive effects of full competition – unlocking a Brexit boost of up to £135bn a year. This dividend has been calculated by Economists for Free Trade – a 16-strong group of leading economists, including myself – who chart the course from Project Fear to Project Prosperity in a new report to be published this autumn.

Read more: Pro-Brexit economists say leaving EU will add £135bn to economy

Leaving the EU will enable the City of London to reclaim its mantle as the world’s financial powerhouse. It will give the UK the freedom to design a more attractive regulatory framework based on global standards. Not only would such a model attract business and liquidity to the UK, it would liberate financial services from the burden and increasing uncertainty of EU regulation.

In particular, we would remove the most unnecessarily onerous requirements of EU laws; move away from the EU’s process-focused approach to one based on outcomes; re-draft laws in common law style, which would bring far greater certainty and clarity compared with the “purposive” method of interpretation in the EU; move away from poor ECJ decision-making in the financial services context, which is insufficiently focused on fact-based analysis; and remove laws designed to provide for the EU Single Market.

Hence why it would make no sense to stick with our current high tax, high spend and high regulation format. This is a point made by Economists for Free Trade, who warn that Philip Hammond is unwise to rule out the UK’s ability to adapt our tax and regulatory regime to suit our new position as a champion of global free trade.

Nor should we be concerned about Europe “stealing” our financial services industry. The banking, asset management and insurance sectors contribute eight per cent to the UK’s Gross Value Added and 75 per cent of the UK’s trade surplus in services. The UK has the world’s fourth largest banking sector – with 17 per cent of all international bank lending, more than any other centre – the third largest insurance sector, and is second for assets under management at £6.2 trillion. The UK’s financial services industry is of great importance to the EU, with around 40 per cent of UK net financial services exports going to the EU: 60 per cent of the EU’s capital markets business is conducted through London, and UK banks are the biggest source of cross-border lending to EU banks and corporates with more than £1.1 trillion of loans outstanding.

It is as ridiculous to believe that the City of London will move to Paris or Frankfurt after Brexit as it is to believe that the French wine industry or the German car industry will move to the UK.

Brexit is a golden opportunity for Britain.

It is also a golden opportunity for the City of London to escape the clutches of the EU as a global financial hub and take the lead in the new digital revolutions of fintech and blockchain.

http://www.cityam.com/270541/city-must-prepare-135bn-per-year-brexit-boost

This group of pro-Brexit economists says leaving the EU will add £135bn to economy

A group of economists who backed Brexit have predicted that leaving Europe could add £135bn a year to Britain's economy.

Economists for Free Trade (EFT), formerly known as Economists for Brexit, calculate that a so-called hard Brexit would lead to a surge in national output worth around £5,000 a year for every household on average.

Sunday 20 August 2017 9:11am

Economists say dropping tariffs could force a trade deal with the EU (Source: Getty)

In the new report due to be released this Autumn, they say that output surge should be accompanied by an eight per cent fall in prices, the equivalent of a £40 a week boost.

Read more: Ministers say UK will make "sufficient progress" in Brexit talks by October

"Hard Brexit is good for the UK economically while soft Brexit leaves us as badly off as before…hard is economically much superior to soft," said Patrick Minford, professor of economics at Cardiff University and a former adviser to the Treasury, arguing that the UK should pursue global trade deals outside of Europe.

“Backers of soft Brexit say it would preserve jobs, but what they really mean is that it would preserve existing jobs by stopping competition from home and abroad. As every schoolboy knows and every politician ought to know, this aborting of competition reduces jobs in the long run…Competition increases productivity and so employment because higher wages paid for by higher productivity makes work more attractive. Competition also increases our general welfare because we are producing more.”

The group, which also includes Roger Bootle of Capital Economics and professor of economics at Cass Business School, David Blake, also believes the UK should eliminate all trade barriers and tariffs if new trade agreements can't be made with the EU and other countries to benefit from such gains

“This is unilateral free trade (UFT) whereby we simply abolish our trade barriers without asking others to do the same. The most famous example of this was in 1846 when Sir Robert Peel abolished the Corn Laws, greatly reducing the price of food and helping to stimulate the Industrial Revolution," said Minford.

Read more: This top economist says two years is the perfect Brexit transition time

Such a move would put pressure on the EU to agree a deal with the UK "flooded" with less expensive goods from non-EU countries.

Minford said it would be "A strong incentive for the EU to do a trade deal with us – which is what we want politically".

"This is the origin of the political soundbite – ‘No deal is better than a bad deal…Free trade acts as ‘the club in the closet’ to bring the EU to a proper trade agreement with us.”

However, anti-Brexit group Open Britain dubbed such a plan "absurd".

“Unilaterally scrapping our tariffs without achieving similar reductions in the tariff rates of other countries would see Britain swamped with imports, leaving our manufacturers and farmers unable to compete. The levels of bankruptcy and unemployment, especially in industry and agriculture, would sky-rocket," said Labour MP Alison McGovern.

And other economists were not convinced by his arguements.

"One thing that professor Minford gets right is that trade boosts our living standards and the economy standards. But he ignores decades of evidence on how trade actually works, and on the benefits of trade agreements," said Dr Monique Ebell, associate research director at the National Institute of Economic and Social Research.

http://www.cityam.com/270525/group-pro-brexit-economists-says-leaving-eu-add-135bn

Beware efforts to ‘get round’ the EU referendum result, says STEPHEN POLLARD

THERE are few more insightful columnists than William Hague. No wonder: having been leader of the opposition and foreign secretary he has been there, done that and can offer wisdom from experience. He has always been clear, even as a Remainer, that the Brexit referendum result has to be respected. Which is why his words yesterday are especially interesting.

By STEPHEN POLLARD

PUBLISHED: 06:00, Wed, Aug 2, 2017 | UPDATED: 07:52, Wed, Aug 2, 2017

Discussing the immediate aftermath of the vote last year he wrote: “Everywhere I went abroad, business leaders and politicians asked me how we would get round the result and whether we would lose heart about leaving when it got difficult.” 

This is revealing because it shows the mindset of an EU elite which cannot accept the idea that anyone might leave the EU. Worse, as we have seen repeatedly since the Maastricht Treaty turned the European Economic Community into the European Union, they simply assume that no member state’s governing class will allow it to happen. 

However it could also be viewed as a case of Lord Hague stating the obvious because history offers so many examples of the EU getting round the results of democratic votes. If voters reject Brussels then voters are wrong.

GETTY

Lord Hague revealed foreign leaders’ views

That view was expressed unambiguously by the then president of the European Commission, Jose Manuel Barroso, who said in 2005: “They must go on voting until they get it right.” 

Lo and behold that is exactly what happened in other referendums. In 1992 the Danes said no to the Maastricht Treaty. Their vote was ignored and the treaty went ahead. In 2001 the Irish voted against the Nice Treaty. That was cast aside. In 2008 the Irish voted against the Lisbon Treaty. Again it was cast aside. 

This contempt for democracy is so deeply ingrained in the EU’s DNA and the mindset of its champions that they cannot even see it. They regard themselves and their project as morally superior to those who question them, so by definition their opponents are not merely wrong but dangerous and it is their moral duty to overcome them. It’s one thing expecting this from the EU’s supporters abroad. It’s another seeing it here after a referendum in which more people voted to leave the EU than have ever voted for any government. 

GETTY

Philip Hammond has been attacked for joining in the squabbling over Brexit

There are many honourable Remainers who have accepted the result and knuckled down to making Brexit a success. But there are also many who from day one have made it their mission to undermine the result and do whatever they can to prevent Brexit. 

Some of them are even in the Cabinet. Take the Chancellor of the Exchequer. Philip ­Hammond has been attacked for joining in the squabbling that has broken out in recent weeks over possible strategies for Brexit. 

Rightly so. Such rows are more suitable to the school playground than the Cabinet. 

But it’s not just the fact of the squabbling that is damaging, it’s the substance from the Remainers masquerading as ministers committed to Brexit. In reality the likes of Philip Hammond have been doing their level best to frustrate it. 

This is a cross-party effort. Across both main parties, Remainers talk of continued membership of the single market, the need to stay in the customs union and having lengthy transition arrangements beyond 2019. All are barely disguised attempts to minimise – and if possible prevent – Brexit. Central to this is the idea now being pushed by Remainers that we will need to keep our borders open for years after nominal Brexit in 2019. 

Last week, for example, it was reported that Mr Hammond was working on a plan to keep free movement for EU citizens for two years after Brexit. 

You can bet your bottom euro on the supposed two year transition period being the starting point rather than the conclusion if they get their way. Because the real agenda is to get round Brexit for as long as possible and in as many ways as possible. Their hope is that the longer we carry on as we are now the greater the possibility that Brexit can be stopped. 

Take the idea that the European Court of Justice (ECJ) should continue to have power over British courts and Parliament. This has been suggested in relation to the rights of EU citizens living here. 

We voted to leave the EU so that we can once again become a self-governing nation. That means, among other things, British judges deciding British law. Removing ourselves from the power of the ECJ is central. Nothing better illustrates how Remainers seek to undermine Brexit than the idea of the ECJ still having jurisdiction here. 

All of this emanates from the belief that Brexit cannot be allowed to happen and that bit by bit it can be undermined. And it is played out in spirit, if not actually in coordination, with the Remainers’ EU counterparts. 

Take the huge queues at airports that have recently started to become a regular travel hazard for holders of non-Schengen passports. 

This isn’t a deliberate attempt to warn us of what lies in store when we leave (even as EU members we are still not members of Schengen and so are also caught in the queues) but the woefully understaffed passport controls and hours of waiting certainly play into the threats of post-Brexit travel chaos. 

This is only just the beginning. The Remainers will not let up – ever. So prepare for worse.

http://www.express.co.uk/comment/expresscomment/835826/brexit-news-latest-eu-referendum-result-theresa-may

Following better than expected third quarter GDP figures, have Project Fear’s warnings been disproved?

Thursday 27 October 2016 6:15pm

David Blake and Vicky Pryce


The likes of the IMF's Christine Lagarde were accused of scaremongering prior to the vote (Source: Getty)

David Blake, a professor at Cass Business School, City University London, says Yes.

The Treasury’s pre-Brexit scaremongering has been proven so wrong, but it sticks to its original, completely implausible assumptions. Its latest position is that those forecasts were made based on the assumption that Article 50 would be triggered immediately, and that no policy response would issue from the Treasury or Bank of England.

We are expected to believe that the government sits on its hands doing nothing, and that triggering Article 50 causes more uncertainty than not. It’s hard to judge which is more incredible.

Economists for Brexit, of which I am a member, was the only serious economic body making the economic case to Leave. Not only did we forecast that the economy would hold up in the short term (our forecasts were in line with yesterday’s numbers), but will ultimately thrive, should the right Brexit policies be pursued – namely global free trade.

The Treasury urgently needs to review its long-term forecasts, and its models, so that the government can make the best decisions for the economy’s long-term future.

Vicky Pryce, a board member of CEBR and a former joint head of the government economic service, says No.

The GDP increase is welcome news. Although we must not over-interpret such early estimates, the huge injection of liquidity by the Bank of England, lower interest rates and high employment levels have no doubt helped.

The real worry is that long periods of uncertainty deter investment – Nissan notwithstanding – and lower long-term growth potential. The timetable for an exit is finally clear, but the outcome isn’t. And some of the third quarter data make worrying reading. The rise was entirely in services, as foreign visitors took advantage of a weak pound, and consumer spending was boosted by cheap credit and high employment. That will reverse as inflation rises and real incomes are squeezed.

Worryingly, industrial production and construction output fell, and despite the drop in the pound, manufacturing output also fell by 1 per cent. Expectations for this year may be going up, but forecasts for 2017 have been continuously downgraded.

http://www.cityam.com/252438/following-better-than-expected-third-quarter-gdp-figures