Political and economic commentators are somewhat perplexed by the enthusiasm of Nissan management for the commitment to competitiveness, the assurances, the industrial strategy and the support for innovation, which they have found in the Brexit plans of the May government. So enthusiastic are they, that they plan to build not one new model in Sunderland, in defiance of their own anxieties about the consequences of a hard Brexit, but two. They and the government assert that there has been no offer of financial compensation for Brexit costs. If you believe them, then something more has happened. More than some nice platitudes over a cup of tea. So what could this be? Is this a clue to the government’s closely guarded secret negotiating hand? Or is it just another undeliverable muddle from a Tory party which has made undeliverable initiatives its signature dish?
Let us go with the former and venture into the very dangerous territory of calling Hammond’s November Statement. Suppose the key foundation of the Brexit plan is to stun the country and the EU with a financial stimulus on a scale unknown in modern times, which will not only be a political elixir at home but will appeal directly to the disgruntled masses of EU citizens, fed up with low growth, unnerving their already nervous politicians. What if this stunning offer would be impossible under EU rules but there for the taking by a nation set free?
Suppose it involves massive infrastructure and social housing investment, support for a skills upgrade of the workforce, government intervention to support the steel industry and above all a commitment to hold the value of sterling down so that whatever tariffs come along UK manufactured goods will be ultra competitive all across the world? And imports of foreign cars more expensive? And suppose that is backed by slashing corporation tax to Irish levels to make the UK the place to emerge profits? That is opening the doors for British business, and the gates and windows too.
To achieve it would require government borrowing on an undreamed of scale. Or would it? Remember May’s speech to the Tory conference, when she said quantitative easing had not worked for ordinary people and industry as a whole, but only the financial sector and those with assets? Well suppose the idea is to use dynamic quantitative easing direct into the base of the economy to create new wealth?
It is all possible. The government would need to take control of the money supply, interest rates, money printing and the currency trading band, as well as inflation. Ideally it should begin a shift of taxation from profit to turnover and from capital gain to transaction value, but that can happen step by step. It is all in my little book Turn Left To Power. I wrote it as a road map for Labour. But there is no reason why the left leaning May government should not follow it too.
If none of this happens when Hammond gets to his feet, you will know two things for sure. The government does not have a plan and Brexit sooner or later is over.