Andre Hebron | Economics Editor | Friday 15 July 2016 | GMT 13:45 | firstname.lastname@example.org
This week Wednesday, Theresa May officially took her crown as the second female Prime Minister. This followed a shortened leadership campaign after Andrea Leadsom made a statement two days before, announcing her withdrawal from the race to Number 10. If there’s one thing I would take from Mrs May’s campaign, it’s “Brexit means Brexit”. A peculiar phrase and no one seems to know what it means. This is hardly surprising since negotiations for the so called “Best deal for Britain” haven’t even begun after the vote to leave the European Union.
David Cameron, the man whose premiership will be largely defined by Brexit, did say that in the event of a vote to leave, he would trigger the key to our departure from the EU, Article 50. Clearly, this was not the case as he resigned the following morning. Concerning Article 50, he played his cards right to the say the least.
The mammoth task of negotiating a deal that will keep us in the Single Market and end the free movement of labour (a key issue during the referendum campaign) has been left to Mrs May. However, the million dollar question is: is she up for the challenge and can she deliver to the benefit of our economy?
Well, the answer to this question isn’t as straightforward as it seems. It is difficult to paint a picture of Theresa’s economic policy. No surprise here as she’s spent most of her time at the Home Office. Although, one thing has become very clear: Osborne’s Brexit Budget which I believe ended his career as Chancellor, has been unequivocally rejected by his successor, Phillip Hammond. As a result, I have had to envision various scenarios where Brexit may work in favour of the UK economy.
The UK could potentially adopt a Norwegian style Free Trade Agreement. Of course this will be dependent on whether the 27 EU member nations agree with this proposition, as they do have the right to veto any decision. In consequence, Mrs May will have to use her negotiating prowess to the best of her ability to appease our former trading bloc partners. Make no mistake – there will be no pushovers in the negotiations, particularly not German Chancellor Angela Merkel. But what a discussion that would be – two strong-willed, female political leaders who share two common traits: boring but getting the job done.
Now looking at the most controversial matter of the campaign being migration, it was under Mrs May’s watch that EU migration escalated to the hundreds of thousands. Controlling migration was just a promise that Cameron’s government could not keep while remaining in the EU. When questioned about how he proposed to control migration if the public voted remain, typical Dave would go on a tangent about the economy.
Having voted remain, I do accept the premise that uncontrollable levels of migration does place a strain on services – the National Health Service a perfect example. Excessive waiting times and all that. However, I would argue the strains were exacerbated by the outright failure of the government to provide sufficient and adequate funding for the NHS. Once again, after the morning of the long knives, it’s in the hands of Jeremy Hunt amid a war with junior doctors. Digest that thought. But anyway I digress.
It’s undoubtedly evident that the Brexit vote has created an economic shock, the most immediate being the pound at a 31 year low. The scale of the long term effects of the leave vote will be observed in the coming years and will be felt mostly by the younger generation. So, it’s safe to say Theresa has a difficult agenda during her premiership to conciliate 75% of young people aged 18-24 who voted Remain, who feel their future has been significantly altered because of this vote.
So, how will Brexit benefit our economy in the long term? One thing is for certain – our budgetary contributions to the EU will come to an end. Now the £350 million a week that went to Brussels can go to the NHS. Not. According to Chris Grayling, our new transport secretary, the £350 million figure was an “extrapolation”. Clearly, there were some lies told during the campaign. And yet, what some businesses may be excited to hear is the reduced bureaucracy they’ll now encounter because of not having to comply with EU legislation, hence reducing costs. How glad they must be that this point is mainly speculation.
Our economy is estimated by highly renowned institutions i.e. the Bank of England, The Treasury and so on (we’ve heard it all before from the two peas in a pod, Dave & Osborne) to shrink by 2.2% by 2030. Will it happen? Who knows? But it’s worth mentioning that unemployment is likely to rise and foreign investment will decline in the medium to long term. So Mrs May has a monumental task on her hands. How she combats the pressing issues of the Single Market and migration will ultimately define her premiership.
Never has there been a time where such political and economic uncertainty has engulfed the nation. “Brexit means Brexit and we’re going to make a success of it” – a promise that will be closely monitored by EU member states and many domestic Brexiteers, considering the vote has triggered anti-EU sentiment.
Is our longest Home Secretary up for the job? To put it simply, she better be. The unprecedented nature of our departure from the EU is one like no other Prime Minister has ever faced before. We can only be optimistic for the future and the sooner the labels of Remain and Leave are pushed aside, the better.