Written for The Telegraph.
Controlling our own trade policy means we are able to negotiate the right deals for Britain.
The clue, as Sherlock Holmes taught us, is “the dog that didn’t bark in the night”. This week was the fourth anniversary of “getting Brexit done” when the UK finally left the EU. Yet from the Government came not a bark, scarcely a growl – except from the Business and Trade Secretary, Kemi Badenoch, who published an excellent 24-page summary of the fruits of Brexit. The rest of the government machine was mysteriously silent.
The consequence of that silence is that the narrative about Brexit is being written by its opponents.
Holmes deduced that the dog didn’t bark because the thief was so familiar that it failed to challenge him. Many in the Government have failed to challenge the familiar narrative that membership of the EU single market was so beneficial to our trade that its loss cannot be offset by trade elsewhere or the ability to make our own laws less burdensome.
I must plead guilty to having helped establish this myth. As trade and industry secretary responsible for implementing the single market programme in the early 1990s I made bullish speeches about how it would boost our exports.
At the same time I helped negotiate the Uruguay Round – which halved tariffs worldwide and set up the World Trade Organisation – and made slightly less bullish speeches about that.
Over the ensuing quarter of a century our goods exports to the EU stagnated – growing less than 1 per cent a year. By contrast, our goods exports to the 100 or so countries with whom we had no trade deal grew by nearly 90 per cent.
Given how little membership of the single market benefitted our exports, it should be no surprise that leaving it has not perceptibly impacted our trade. Since we left, UK goods exports to the EU have actually done slightly better than our exports to the rest of the world.
What lessons can we draw?
We should not exaggerate the importance of trade deals. What really drives trade is businesses producing goods and services others want, alongside a competitive exchange rate. Yet business lobbies agonise about customs checks adding 1 per cent to their costs but endured without a murmur an exchange rate the IMF said was 10 per cent overvalued.
The second lesson is that the most valuable trade deals for the UK are those with fast-growing markets, which reduce previously high barriers, and which cover services. So Kemi and the Prime Minister are right to hail the Pacific trade pact of which we will be the only non-Pacific member and the potential Indian trade deal. Services, which are particularly important for the UK – accounting for half the value added of our exports – rarely featured in trade deals negotiated by the EU.
So now our priority must be to upgrade our deals to incorporate more opportunities for service companies.
The third lesson is that the greatest Brexit dividend is the ability to make our own laws. We can streamline regulations to reduce compliance costs and promote competition.
For example, simplifying the Working Time Directive won’t bring back the 60-hour week, but it will simplify annual leave and holiday pay calculations and recordkeeping. £1 billion of administrative savings are planned across business.
In the 1980s we saw that the cumulative effect of individually modest deregulatory measures is huge – moving Britain from being the slowest-growing major economy in the EU to the fastest. At last we can apply deregulation to inherited EU law.
Although these measures cannot yet have had much impact, the UK economy has been doing better, or less badly, than its competitors, So the Brexit effect – pace the BBC – cannot be negative. The IMF even forecasts Britain will grow faster between now and 2028 than Germany, France, Italy and Japan. It’s time to bark back at those trying to steal the Brexit narrative.