Sajid Javid, the UK chancellor, has delivered a tough message to business leaders to end their campaign for Britain to stay in lock-step with Brussels rules after Brexit, telling them they have already had three years to prepare for a new trading relationship.
In an interview with the Financial Times, Mr Javid quashed any prospect of the Treasury lending its support to big manufacturing sectors — which include cars, aerospace, pharmaceuticals, and food and drink — that favour alignment with EU regulations.
“There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union — and we will do this by the end of the year,” Mr Javid said, urging companies to “adjust” to the new reality.
Speaking in a sandwich bar near the Treasury, the chancellor nevertheless gave an upbeat assessment of Britain’s prospects outside the EU, insisting that British companies would flourish and that his guiding mantra for the post-Brexit economy would be “human capitalism”.
He vowed to pump more money into “skills, skills, skills” and backing infrastructure schemes in the midlands and north, even if they did not offer as much “bang for the buck” as those in London.
He added that he wanted to boost growth rates to between 2.7 and 2.8 per cent a year — the average for 50 years after the second world war. Last week, Mark Carney, Bank of England governor, told the FT he thought Britain’s trend growth rate was much lower at between 1 and 1.5 per cent. [...]
“Once we’ve got this agreement in place with our European friends, we will continue to be one of the most successful economies on Earth,” he said, adding that the UK had continued be a highly popular destination for inward investment.
Asked how regulatory divergence might impact industries such as automotive and pharmaceuticals with intricate supply chains spanning Europe, Mr Javid said: “Japan sells cars to the EU but they don’t follow EU rules.”
He added: “We’re also talking about companies that have known since 2016 that we are leaving the EU. Admittedly, they didn’t know the exact terms.”
Mr Javid declined to say which EU rules he wanted to ditch. He said he wanted financial services to trade with the EU on the basis of “outcome-based” equivalence of rules: it is far from clear if Brussels will agree. [...]
“I hope that in five years from now, we’ve made really good progress towards dealing with the big economic challenges,” he said. “And there’s two sort of biggies — growth and productivity”. [...]
Full interview on Financial Times (subscription required)
Related article on Financial Times: Javid’s EU divergence plans provoke industry backlash
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