Theresa May is moving in the right direction. The prime minister’s speech to the CBI conference marks a welcome retreat from comments that left the impression that her government is suspicious of, if not hostile to, big business and the City of London. In the run-up to Brexit, companies face enough uncertainty without having to wonder if the government is on their side.
Two issues dominate the business agenda in the UK today: free movement of labour and trade terms with Europe. On both, the government needs to offer greater detail and a clearer commitment. Doing so is not without political risk but the prime minister has begun to find a better balance between populist pressures and the needs of the UK economy.
Mrs May’s reference to transitional arrangements after Brexit is a good start. The UK will struggle to negotiate all aspects of a new trade relationship with the EU within the two-year span of Article 50 talks. An interim arrangement would provide further reassurance, assuming that the other 27 EU members agree. They may not.
Brexit will dominate the prime minister’s term in office but there are pressing questions about her domestic priorities and economic policy. Mrs May wants freer trade, lower corporation tax, a reduced budget deficit and a more productive economy grounded in innovation. At the same time, she wants to help globalisation’s left behind, increase controls on immigration, bring executive pay back to earth and make employees’ voices heard. All laudable sentiments. This week’s Autumn Statement will reveal the degree to which they are reconcilable.
For British business, competitiveness and stability require that all skilled workers who are offered a job in the UK should be able to come, and that any worker who has a job, and who has entered the UK legitimately should be able to stay. A plain-spoken commitment to these principles would be a first step to establishing a predictable climate for employers.
Adding £2bn to the government’s £10bn research spending may contribute to productivity. Its effect will take decades to be felt, though. If the brightest foreign workers decide they are not entirely welcome, or if companies are threatened with sudden holes in their workforce, the damage will be immediate. Human capital matters in a modern economy.
On trade, Mrs May should make it clear that the priority is to secure the freest possible terms with the EU. The subsidiary issues — from pensions to agricultural policy — are mere details in comparison. It is fine to aim for renewed trade with, say, commonwealth nations. But such relationships can never offset a damaged one with the bloc that accounts for nearly half of UK trade.
The government has said much that has hurt its relationship with business. Mrs May has spoken with disdain of “citizens of the world”; her international trade secretary has said that British business has become “fat and lazy” and suggested it is not contributing sufficiently to the welfare of the country; the home secretary floated the idea of making businesses provide lists of foreign workers to the government. In restive times, loose talk plays well but it is usually destructive.
Mrs May’s CBI speech suggests a recalibration. Business leaders need to know her words are more than a change of tone. Offering greater clarity on free movement of labour and trade with the EU would signal a change of heart instead. It would offer the certainty which business requires before it can bring jobs and prosperity to an independent Britain.
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