To thrive after Brexit, we must turbo-charge forgotten corners of the country
Howard Shore, Founder, Puma Brandenburg Ltd & Shore Capital Group Ltd
All entrepreneurs and investors can quickly get a sense of how well a company is doing from the moment we walk through the door.
Since Boris Johnson walked into Downing Street, there has been a palpable change in the energy and drive of the UK Government. Gone is the timidity and nervousness which marked Theresa May's disastrous time as Prime Minister. And in its place is a positivity and optimism which is so very refreshing.
The Government is obviously focused on leaving the European Union by 31st October. And I feel confident that if a general election takes place either before or after this date that voters will return Boris Johnson to No 10 with a renewed and enhanced mandate.
Next Wednesday, Sajid Javid will announce his one-year spending review and we now also know that we have a Queen’s Speech on October 14th. Preparing for these two important announcements presents an excellent opportunity for the Government to step back and take stock of how the UK can best take advantage of the economic opportunity that Brexit presents.
What are we good at? What are we better at than other European countries? How can we play to these strengths? And what policy changes are required to make the UK the most prosperous and attractive place to do business in Europe?
Our dominant position in financial, legal, accounting and media services are obvious advantages. We are also ahead when it comes to tech. Bioscience is a major strength, with the UK boasting five of the world’s top 25 universities for life sciences (the EU has none). And this is before the natural advantage that the English language gives us internationally and our world class culture, music and sport.
We therefore have a very good head start for our post-Brexit future, but perhaps our biggest weakness is that our prosperity is not spread more evenly throughout the country – a fact which I’m pleased was recognised by all of the candidates in the recent Conservative leadership election.
So how can we best play to our strengths and whilst also spreading wealth more evenly throughout the country?
First of all, it is important to have the right regulatory conditions to boost economic growth, to expand the economic pie. It is notable that some economists thought that it was impossible to grow a modern Western economy by more than 3 per cent a year. President Trump has proved that theory wrong. Trump’s tax changes plus his “one in, two out” approach to new regulations have turbo charged the US economy. So we need to consider how best to take advantage of the opportunity to diverge from the EU’s most job-destroying regulations.
The Treasury also needs to consider how to encourage further foreign direct investment and how to make it more advantageous for businesses to headquarter in the UK. It is not just a case of cutting corporate tax (the UK already has one of the more attractive corporate tax regimes in the world), it's also a case of structuring corporate tax so it's cost effective to come to the UK - encouraging businesses who are no already based in the UK to locate here. Ireland has traditionally done very well on this front, but the prospect of EU corporate tax harmonisation post-Brexit means we can position ourselves to become by far the most business-friendly place to headquarter in Europe.
It is also vital to encourage business clusters around our world class universities and to utilise tax incentives to encourage university offshoots to take investment risk through venture capital. We should also give fast track residency to anyone from anywhere in the world who graduates from a top 20 university with a 2/1 or better.
When it comes to spreading wealth, additional infrastructure spending most be a priority. Interest rates are so cheap at the moment that borrowing £100bn for 100 years at, say, 2 per cent would only cost taxpayers £2bn a year in interest. Spent wisely on the right infrastructure projects, it would reap large dividends as part of a new long-term economic plan. Good transport links for Northern cities should be a top priority, as pledged by both Sajid Javid and Boris Johnson in their leadership campaigns. Additionally, we should exempt businesses from Employers National Insurance in specific parts of the country as an incentive to invest in more deprived areas.
With Boris Johnson in No 10 and Sajid Javid in No 11, our businesses and livelihoods couldn't be in better hands. With the right economic decisions, free of EU restrictions and a renewed electoral mandate, the UK could experience much faster economic growth than the Eurozone. We could have prosperous and exciting times ahead of us.
A version of this article first appeared in the Sunday Telegraph: https://www.telegraph.co.uk/politics/2019/09/01/thrive-brexit-must-turbo-charge-forgotten-corners-country/