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The referendum itself has not sealed our fate — our fate will depend on the policy choices we make in coming months. And despite the pessimism, the chance to rethink our economy means that we can emerge stronger. But only if we adopt the right plan.
This article was first published as an op-ed for The Times on 28 June 2016.
It is now worryingly clear that there has been little serious thought given by government or the Leave campaign as to what happens next. I suspect few thought that Britain would really leave. There is no plan and we desperately need one.
Businesses need to understand the ambitions of our would-be leaders for our economy and society. Tone will be crucial. There are two key issues: trade and immigration. In both cases the choices are not easy, but they are simple.
On trade, we must aim for an outward-looking, ambitious, free-trading, free-market economy. If, instead, we seek to “protect” our way to prosperity, then we are destined for poverty. A statement of intent that we will seek an open and global economy will strike an essential chord.
On immigration the question is also straightforward: will we set out to controlour borders or shut them? It is reasonable for us to control numbers, and that we insist that people who move here work for a living, pay their taxes and obey our laws. But to lock out vital overseas skills would be an economic own goal. Just as importantly, if we allow prejudice to shut our borders, it will alienate us from the community of nations among whom we now seek to trade. Our attitude to their citizens will determine their attitude to us.
Some of the campaign rhetoric on immigration was, in truth, ugly and a little shameful. Our reputation as an open-minded nation has been damaged. Contrary to popular belief, many of us who voted Leave did so because we feared a European superstate, not because we are xenophobes or racists. Whoever leads the country in October must speak for the silent majority and re-establish our credentials as a tolerant nation.
But whatever tone a new leader takes, Brexit’s shock will take its toll. Without economic reform, we can expect a recession. Fortunately, we can do much to stimulate our economy. We can tackle policy taboos that have undermined it for 20 years; reforms that are desperately needed but too easy to overlook in good times.
A reform of our stultifying planning system is top of the list. Britain needs 300,000 more homes each year than the market can provide in the present regime. At £150,000 a home, this would add £45 billion to GDP. The right reforms could stimulate massive investment in the UK: invest in roads, expand London’s airport capacity, build the gas-fired power stations we need. Between them, these measures could add at least 3 per cent to GDP for years to come.
We also need to allay the fears of our financial services sector. This sector has the most to lose from Brexit; if we do nothing, this essential industry will vote with its feet. We need a new settlement with the banks — they have taken their punishment. We need to end the stream of punitive fines, insults and painfully bureaucratic regulation. Brexit gives us the chance to rethink how we can nurture the City.
John F Kennedy was fond of pointing out that the Chinese word for crisis was an amalgam of two characters, “danger” and “opportunity”. We must seize the opportunity to reform our economy and forge a healthy, outward-looking relationship with the rest of the world.
We sit at the centre of the world’s time zone; we are a peaceful, safe, honest place to do business; our first language is the world’s second language. Most importantly, we are an intelligent, innovative, decent, hard-working and tolerant people. If we can put the vitriol of the past few months behind us, and adopt the right policies, there will be few countries better placed to prosper. As the leader of one UK business, I know we will certainly take that view and continue to invest in the UK.
Lord Wolfson of Aspley Guise is chief executive of Next and an Open Europe Advisory Council Member.