• EMEA

New Year, New plan, New economy

NE_19011712 point plan  The fog around UK’s Brexit plans has lifted somewhat, as Theresa May set out her vision in the form of a 12 point plan. The clearest take-away: Brexit ‘cannot mean membership of the EU’s Single Market’. May favours a Free Trade Agreement that prioritises controls on free movement, relinquishing payments to the EU, and domestic control over law and regulation. Some sort of customs agreement will be targeted, but not a full Customs Union. Jeremy Corbyn describes May’s ambitions as ‘wanting to have her cake and eat it’. Nicola Sturgeon described the proposals as ‘economically catastrophic’. Others have described the plan variously as a strong negotiating stance, or a straw man, designed to be pulled down by Parliament or the regional assemblies leaving limited culpability on the porch of Number 10.

EU Primacy  ‘We will bring an end to the jurisdiction of the European Court of Justice in Britain. Because we will not have truly left the European Union if we are not in control of our own laws’.  Since the ‘Factortame’ case in the House of Lords in 1989, it has been established that EU law takes precedence over domestic law. The prospect of removing the well-meaning but poorly applied EU Procurement Directives will doubtless be welcomed by public authorities seeking to promote regeneration projects. The provisions, designed to prevent corruption and distortion of trade in a wider sense, are not easily translatable to public land partnerships, and are considered by many to have stood in the way of the best commercial and practical deals for Local Authorities. However, control of our own laws does not of course necessarily mean disapplication of existing laws. Constitutional lawyers will doubtless dine out for years to come on the mountain of work coming their way.

Repositioning the UK Economy  So what happens if the EU doesn’t like our proposals? ‘We will change our model and we will come back, and be competitively engaged’, says Philip Hammond. And by this he means reducing corporation tax in a bid to attract global business and to repatriate profits. Reiterated by May, this proposal was slammed by Keir Starmer as a ‘bargain basement tax haven threat’. UK corporation tax (20%) compares with headline rates for the US (35%+, but likely to be slashed by Trump), Germany (c.30%), and Ireland (12.5%). Corporation tax accounts for <10% of total UK tax revenue, and lower rates may stimulate higher volumes. However, reduced revenue would undo the reduction in Public Sector net borrowing (2009, £154bn; 2015: £81bn) and add to public debt which is already at its highest for a century (c. 84% of GDP). The other alternative: more austerity, creating further challenges for those regions of the UK that are already struggling the most.

Feeling blue?  2016 was a fairly trying year for most. The good news is that the worst of 2017 is now behind us, or at least it is according to a formula for ‘Blue Monday’ attributed to Dr Cliff Arnall. Developed in 2005, the formula considers factors such as weather, debt and time since the failure of one’s New Year’s Resolutions, to arrive at the ‘most depressing day of the year’. Using the same formula, the happiest day of the year (sponsored incidentally by Walls Ice Cream) typically falls between 21-24 June. Depending on one’s politics, this might or might not have been 23 June last year.

SUBSCRIBE TO READ THE NEXT ISSUE IN FULL

New Europe email

Subscribe to New Europe a weekly email briefing from Richard Pickering, Head of UK Research & Insight.

Richard Pickering, Head of UK Research & Insight

Richard Pickering, Head of UK Research & Insight.

Leave a Reply

Your email address will not be published. Required fields are marked *

  • Regions

© 2015 Cushman & Wakefield, Inc.