Burnham’s EU reset will make Britain richer but easier to quit
Andy Burnham’s push to cosy up to Europe could hand Britain a growth windfall and its wealthiest residents an escape hatch in the same stroke, warns the CEO of deVere Group, one of the world’s largest independent financial advisory organisations.
The comments from Nigel Green come as the prime minister calls on MPs to back closer ties with the EU, after revealing he’s been told Russia did meddle in the 2016 Brexit vote.
He says: “Closer ties with Europe will be good for the economy, there’s no question about it.
“But the same changes that make it easier to do business with Europe also make it easier for people, and their money, to move there. Investors need to factor in both.”
Burnham says Brexit has done more harm than good and refuses to rule out rejoining after the next election.
“What’s really hurt British businesses since Brexit is the extra paperwork, the checks and the delays at the border,” notes Nigel Green.
“Reduce those and you’ll see it come through in exports, in productivity and in how confident companies feel about investing here.”
Recent analysis puts the long term cost of the current deal at around 2.5% of GDP. Closer ties could claw back up to 1.2 percentage points of it.
He continues: “I’d expect markets to take this well. Sterling tends to benefit when the relationship with Europe looks more settled, and British shares have looked cheap compared with their peers for a long time. Closer ties could help change that.
“Any talk of a second referendum will cause some volatility, of course.
“But investors mainly want to know which direction the country is going in, and if that’s clear, they’ll look past the short term noise.”
A government minister says Russia is pouring £1.5bn into disinformation and propaganda this year alone.
“Investors take foreign interference seriously because it goes to the heart of whether institutions can be trusted,” says the deVere CEO.
“Being upfront about it protects the UK’s reputation with international investors.”
But the door swings both ways.
An estimated $160bn of private wealth has left Britain in two years. The top 1% of earners pay around 27% of all income tax. And Britain was forecast to lose 16,500 millionaires last year, more than any other country.
“We’re already seeing entrepreneurs, senior executives and internationally mobile families seriously considering a move abroad as taxes go up,” he says. “It comes up in our conversations every week.
“If moving around Europe becomes easier, that’s one less obstacle for them.
“Closer ties with the EU won’t solve problems of the UK’s own making. If the tax burden keeps rising and the state keeps growing, we risk losing the entrepreneurs and investors the economy depends on, and we won’t attract new ones to replace them.
“Wealthy people and business owners have more choice than ever about where they live and invest, and they’ll go wherever they feel most valued.”
The Conservatives have already vowed to unpick Labour’s moves towards Europe, including a planned food and farm trade deal.
Nigel Green concludes: “Alongside the EU reset, the government needs to get domestic policy right. This means a competitive tax system, a planning process that doesn’t hold projects up for years, and enough stability for businesses to plan ahead with confidence.
“The UK has huge strengths in its talent, its legal system, and its capital markets. Get both of these right and it can be one of the most attractive places in Europe for capital.
“Get only one right and it simply becomes easier for people to leave.”