If we must have a ‘hard Brexit’, let’s at least make it low-carbon

Business Green

Published: 26th October 2016

Full article (paywall): http://www.businessgreen.com/bg/opinion/2475207/if-we-must-have-a-hard-brexit-lets-at-least-make-it-low-carbon

Article in full:

The government seems to be veering increasingly towards a ‘hard’ Brexit. But the economic illiteracy of such a position was demonstrated recently by the government hinting that it will shield selective corporations from the economic impacts of Brexit.

Following a meeting between Theresa May and Carlos Ghosn, Nissan’s chief executive, the government gave clear indications that it would offer compensation for any tariffs imposed on businesses if the UK were to leave the single market. In other words, the government would effectively be paying corporations to keep jobs they maintain for free as part of the single market. Aside from the absurdity of such an approach, this raises some serious questions.

Firstly, has the government costed this policy? Or will it end up costing the British tax payer more than if we remained members of the single market?

Secondly, the question of which sectors will be sitting pretty on this Brexit cushion. Will it apply to all car manufacturers or only some? Will such support just be targeted at foreign and multinational corporations? And will British taxpayer’s money be targeted at bailing out corporations operating in areas where a large majority voted to leave the EU, such as in Sunderland, thereby effectively rewarding people who voted for Brexit. This would be a highly divisive policy.

Thirdly, if the government is softening the Brexit blow for large – and foreign owned – corporations, why is it not offering the same for thousands of smaller – mainly home grown – businesses? There were over five million SMEs in the UK in 2014, accounting for 99 per cent of all businesses and employing over 14 million people. Will the government ignore this economic backbone of the country in favour of a few giant corporations?

Of course there is also the very important question as to whether offering subsidies to selective businesses is legitimate under WTO rules anyway, which is where we will inevitably end up if we do leave the single market.

We can draw three important conclusions from all this. Firstly, it is absolutely essential that there is full and transparent scrutiny over what kind of vision the government has for Britain outside the EU and the Brexit deal as it develops. A good start would be to bring the discussions out from behind closed doors in Westminster corridors and into the public arena. Our sovereign Parliament must help shape our future, but the wider public must be engaged in this process too.

Secondly, it shows the considerable risks and chaos that could follow the UK leaving the single market. It seems pretty clear that the UK’s interests – not just economically, but also socially and environmentally – are best served by staying as close to the EU as possible, ensuring we protect both jobs, workers’ rights and the environment.

Finally, if Brexit means hard Brexit, and the government is to show selective support to businesses – assuming such support is legal – let’s at least use it as an opportunity to help fund the transition to a low carbon economy. To lock in high carbon industries through such support would be a gross error. Let’s offer support to those businesses that are building a new green economy and doing something or producing something of high social value.