On the face of it, the deserted Hullavington airfield, a former RAF base in Wiltshire, ought to tell us nothing about Britain’s economic future. Yet in just a few days’ time, the workmen will be moving in, the rotting yet strangely beautiful hangars will begin to be restored, and a gigantic new Californian-style campus for Dyson, the tech giant, will begin to rise from the ashes of our industrial and military past.
It’s a perfectly timed gift to the Government, which couldn’t have dreamt up a better vignette of how it would love to transform Britain once we leave the European Union. Sir James Dyson, the firm’s owner, wants to hire thousands more engineers, technologists and scientists: the firm is pouring a fortune into new battery technology, artificial intelligence and robotics. Five years ago, it had just 900 staff at its existing site next door; it now boasts 3,500, of which half are scientists and engineers.
Sir James’s multi-billion-pound bet is just the latest confirmation that Britain has spectacularly won Brexit’s first phase, against almost all expert opinion. It’s not just that the GDP data and employment figures have continued to grow as if nothing had happened, with the UK expanding faster than America and the Eurozone last year. Crucially, even without any extra tax cuts or deregulatory measures, we continue to attract investors from all over the world.
Take the broader tech industry: all of the larger firms have upped their commitment to Britain since the referendum. Apple will become the biggest tenant in the regenerated Battersea power station. Facebook will increase its UK staff by half after it, too, opens new London headquarters; it will primarily hire engineers. Google is spending £1 billion on its new buildings and will hire 3,000 people. Snapchat will report its non-US revenues through London. Softbank’s post-Brexit acquisition of the UK’s flagship chip designer Arm will boost, rather than reduce, our science base: the Japanese buyer will be doubling Arm’s UK staff by 2021 and has already hired several hundred workers. With IBM and Amazon also growing, Britain is now Europe’s tech capital, and our lead will only grow, especially now that the Government has made it clear that firms will continue to be able to hire the best and brightest from overseas.
The good news isn’t confined to one industry. In the past few days alone, Canary Wharf has submitted plans for four more skyscrapers and China has bought the City’s Cheesegrater skyscraper for £1 billion. Boeing announced last week that it would be opening its first European factory in Britain. It will be a small plant in Sheffield making actuators for Boeing’s next-generation aircraft, but it’s a great first step. Even older industries are seeing a fresh burst of investment: Tata Steel, Liberty and British Steel have all announced major investments.
The challenge now for ministers is to win Brexit’s second and third phases. They must urgently intensify the focus on financial services and car manufacturing, providing special solutions to the challenges those industries face and nipping potential problems in the bud. They also need to outline what the post-Brexit infrastructure will look like, and provide a cogent, realistic plan as to how it will be delivered. The UK will need new regulators for industries that are currently controlled from Brussels; beefed up departments in areas where vast powers and spending returns to the UK; a robust system for processing customs declarations that can deal with far greater volumes; and a workable, efficient and fair visa policy. It then needs to outline a bold longer-term plan for competitiveness.
When it comes to the City, the situation is better than anybody expected by this stage. Bank of America and Wells Fargo have commissioned new headquarters, and everybody now agrees that London will remain a dominant financial centre. Yet financial service exports are different: in some cases, they are banned unless explicitly allowed by the EU. This means that, in a worst-case scenario where the EU goes fully protectionist, some operations currently conducted in London would have to be moved.
The more extreme scenarios are implausible, not least because they would also cripple the EU by preventing banks, governments and firms from raising the cash they need; but 10,000 London banking jobs could still be lost on my reading of what the biggest firms are considering. This would knock many billions off our current account, but it would be a smaller hit than that generated by even a moderate financial downturn, let alone a real recession. The boss of HSBC has said that the business lost by the City would be recouped in two or three years via expansion into other markets.
But here too the Government can do more to mitigate and prevent any hit, in addition to using all of its many other negotiating cards. It should announce that any reduction in market access would be met by immediate, dramatic pro-competitiveness measures. The bank levy would be scrapped, as would the bonus caps, and other rules would also be reviewed. Such moves would electrify the City, while keeping it aligned to the broad, prudent G20 consensus.
There have also been wobbles in the car industry. Nissan was supposed to have agreed some sort of deal with the Government but it is now fishing for additional help; BMW is hinting that it may make an electric Mini abroad, presumably unless it, too, can be bought off. Vauxhall and Ford are separate problems: they are part of declining empires that have been cutting back in the UK for years.
The Government should seize the initiative, and not wait for any factories to be cancelled before unveiling the most pro-automotive business climate in Europe. It should, in effect, promise to compensate car-makers for any extra costs arising from our departure from the single market and customs union: there are ways of doing this that are compatible with WTO rules.
We have a tendency in this country to underestimate our attractiveness. Even without any tax cuts or deregulatory moves, and despite the “uncertainty” beloved of the Remainers, the UK has performed superbly these past six months – so imagine just how well we could do if we really tried. It is time for the Government to pull out all of the stops, and to show the world what a truly pro-market, pro-capitalist Brexit Britain can achieve.
This article first appeared at the Telegraph. Read more here.
Image: Oliver Huitson. All rights reserved.