This article appeared in The Evening Standard on Thursday 6th April, 2017. The views expressed here are the personal views of Gerard Lyons and do not necessarily reflect the views of Netwealth Investments.
The UK has been as open and transparent as it is possible to be in any negotiation. Moreover, it is not confrontational but constructive. As with any negotiation, we need to retain the option to walk away if needed. That is why it is right that the Prime Minister linked security with trade in the event of no deal.
We want a Clean Brexit and based on that we can then negotiate. We need to be outside the Single Market to return law-making to Westminster and to implement a migration policy that suits our domestic needs. It makes economic sense too. The Single Market does not work properly in services - and remaining in it would mean the EU's rules and regulations apply to all UK companies and not just the 8% of our firms that sell into the EU. Why would we want our future rules and regulations for all our firms to be dictated by the EU?
Small and medium-sized firms across London should be empowered by this. In future they can lobby their domestic MP and she or he can influence our future law-making directly.
The Opposition is right to say we should avoid a race to the bottom on workers’ rights and it is encouraging the Government agrees. But we do need to cut taxes when possible.
It is good a clear approach has been outlined, as business dislikes uncertainty. Yet the challenge is that nothing is agreed until the deal is signed at the last minute. In coming months there will be a need for the Government to focus on the longer-term positive vision, addressing business worries and ensuring firms continue to invest here as they have done since last June. We also need to start preparing more for life outside the EU. For instance, this has to include spending on infrastructure at ports, as well as regional policy.
The issue of Scotland will be important but there is a big difference between Brexit and Scottish Independence. In the EU, the UK was continuing to cede influence to Brussels. In contrast, Edinburgh continues to receive more power.
There is also a case for more fiscal devolution to London but that can wait. For London the focus will include clarifying the issue of EU citizens based here, and on financial services. The City is in a strong position - directly mentioned by the Prime Minister in her Article 50 Letter and given its combination of skills, knowledge and experience, and Europe's need for access to a global capital market.
We should also not lose sight of the changing dynamics on the Continent. Last Friday I spoke after Antonio Tajani, the President of the European Parliament, at a conference in Italy. He spoke about the need to focus on the "real economy". What struck me was how pessimistic the mood was in Italy about Europe. Income per head is lower there than in 1999. Youth unemployment is 38%. The policies of the euro have led to deep discontent there and elsewhere.
In economic terms it makes sense for the EU to do a deal with the UK. We need our Government to play the politics well enough to ensure that this is the case. So far, so good.