John Redwood’s latest diary discusses the business reaction to Brexit
Yesterday morning the Chancellor added his voice to the Governor of the Bank of England to reassure markets. It was important to hear him say that there is no need for panic in financial markets. The Bank is making plenty of liquidity available to banks and the markets should it be needed. He also confirmed that there will be no emergency budget. I have always argued that such a tax raising and spending cuts budget is undesirable and needless. I always knew it would not pass the Commons. I would have been one of many who would vote it down. What we need is a budget to promote expansion and prosperity, spending the saved contributions as soon as we are out.
The international reaction to the UK’s declaration of independence has seen shock give place to acceptance and in some cases admiration from outside the EU. I expect various countries to come forward soon and to ask to enter negotiations with the UK for trade agreements, now we will be free to do so for ourselves. The government needs to set up and staff a Trade Negotiation unit and get on with it.
The business reaction to Brexit is also on the move. Many companies who did not want a Brexit vote are now saying they can do business in and from an independent UK, just as they do today from the UK as a member of the EU. The new lower level of the pound will make the sums for investors better, as products made in the UK will be more attractively priced and more profitable at these sterling levels. Sterling may not stay down at its new level against the dollar indefinitely, but all the time it does UK competitiveness is much enhanced.
The fishing industry is happy, planning how a new UK based system of quotas and regulations could help us rebuild both our fishing industry and our fishing grounds. Farmers are coming to realise that freed of the EU they can help the UK government design a rural and farming policy suited to our needs. I have found some of the hostility and reserve about Brexit in the City is changing. City professionals recognise that Brexit brings opportunities. Many of the sensible ones now want to help the government negotiate a good outcome on services.
I want to see the government inject some pace and purpose into the exit process. The next few days will see Conservative MPs engaging with Leadership candidates wanting to be Prime Minister. My lead questions will be How quickly do you want to get the UK out? What route will you use to secure our objectives, clearly laid out in the winning Leave campaign? Many of the answers have already been published on this site.
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