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May’s Brexit speech heralds damaged economy and weaker public sector

Theresa may at podium
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With the prime minister announcing plans for a hard Brexit, it is in the EU’s interest for the UK to suffer, says Ian Ritchie

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When the AJ invited my comment on Theresa May becoming prime minister last July, I wrote: ‘Her greatest struggle will not be with internal politics, but within her own mind: resolving the conundrum of balancing the demands of the Brexiteers to limit immigration – which she subscribes to – and the EU’s demand for freedom of movement of Europeans if the UK wants full access and all the benefits of the EU market – which she also subscribes to.

‘I predict the arrival of Theresa May at No 10 Downing Street will herald an era of more, not less, uncertainty. She does not have the full support of her party, and her party is staring down the UKIP shotgun.’

Six months later, it seems she has chosen to eschew complexity and focus on limiting immigration from Europe, happily placing the UKIP gun in her cabinet. Her reading of the referendum is that British voters decided that ideological considerations trumped economic ones.

Unfortunately, 90 per cent of voters wanted to stay within the single market. Before the vote, the Leave campaign’s Matthew Elliott promised that the UK would ‘be able to trade with the single market on free-trade terms, without paying into the system or accepting freedom of movement.’ Boris Johnson, in a post-Brexit article, assured the public that there would ‘continue to be free trade, and access to the single market’.

Even the egregious Nigel Farage, in his speech to the European Parliament after the Brexit vote, promised the British would ‘be your best friends in the world’ if the EU made a tariff-free trade agreement with the UK.

Although May still seems confident that the EU has an incentive to keep things as they are as regards trade with the UK, this is delusional. Subject to the outcomes of the 2017 and 2018 elections in France, the Netherlands and Germany, the EU holds all the aces at the negotiating table over the way the UK will exit, regardless of May’s tough talk.

If the UK suffers because it has left the EU, that will serve as a stark warning to other EU members who might want to leave

Banking is one of Britain’s biggest industries, but that is dependent on clearing rights. There is no reason for European countries not to be delighted to see their own banking sectors flourish at the UK’s expense. Turning the UK into a deregulated tax haven if the EU fails to agree a beneficial trade deal – as May has threatened – would further shift the tax burden from companies to individuals.

Moreover, although a hard Brexit may damage the EU’s economy – which is a quarter of the world’s GDP – it’s unlikely to do as much damage as it will to the UK. In 2014, UK exports of goods and services to the EU were four times as much as in the opposite direction. As May herself said in May 2016: ‘We export more to Ireland than we do to China, almost twice as much to Belgium as we do to India, and nearly three times as much to Sweden as we do to Brazil.

‘It is not realistic to think we could just replace European trade with these new markets … But in a stand-off between Britain and the EU, 44 per cent of our exports is more important to us than 8 per cent of the EU’s exports is to them … Remaining inside the European Union does make us more secure, it does make us more prosperous and it does make us more influential beyond our shores.’

More importantly, negotiations with the EU will not simply be about economics; they’ll be about politics, about Brexit’s effect on the stability of the EU. I wrote in the AJ the day after the Brexit vote: ‘I fear the impact will lead to not only a dis-United Kingdom, but also profoundly shake Europe as a whole.’

Positioned between an unpredictable, Eurosceptic president of the USA and a cyber-sabre-rattling Russia, EU leaders will have an ideological commitment to the union that far outweighs the temptation of keeping the UK economy within the single market. There are excellent reasons for the EU to drive a hard bargain with the UK, even if the EU takes a financial hit: if the UK succeeds without the EU, that will be proof that the EU as it now stands is economically unnecessary. If the UK suffers because it has left the EU, that will serve as a stark warning to other EU members that might also want to leave.

For the immediate future there is no clarity for EU citizens in the UK, and vice versa. They are, with breathtaking cynicism, being used as bargaining chips by May. This will affect most architectural and engineering practices, as well as the NHS, other institutions, and businesses all over the UK.

I anticipate the continued demise of the NHS, education funding cut, and investment in public housing evaporating

Our universities will lose upwards of 30,000 European students, while our highly collaborative scientific research base, whose strength is based on easy mobility for an international workforce and billions from the EU, will lose out. So will European industrial research partnerships funded by the billions of euros currently invested. We shall have to forge new research arrangements with other parts of the world, and this will take time.

I anticipate seeing May preside over the continued demise of the NHS – already a rump of what it was –  and will watch with deep concern as funding for public education is cut and investment in public housing evaporates.

I was a member of the 40-person European Construction Technology Platform, High Level Group in Brussels, the body that decided in 2006 where €5 billion of R&D funding should be spent in the construction sector. Our influence was tangible. What levels of investment will this government bring to the table to enable us to work with others of like-minded approach to urban development?

As EU funding and tax revenues decrease, the pound loses value, and prices of imported goods – including food and clothing – rise, as they are already beginning to do. The poorest people in the UK, who overwhelmingly voted Leave, will be hit the hardest. The UK has a great deal to lose.

In my lifetime I’ve witnessed the UK abandon the Commonwealth for Europe, thereby alienating the Antipodeans, among others. Now we’re alienating the Europeans. We should be harbouring ideals of improving cultural and business relationships with all peoples and countries.

I believe that what we all need now are courageous statesmen – not self-serving politicians – to step forward and guide us during this complex and dangerous time. Failing that, I anticipate a brutal transition at best, from which a very different nation will eventually emerge.

Ian Ritchie is founding director of Ian Ritchie Architects

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