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The big debate: Is Britain’s post-Brexit future bright?

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Summary

Coutts-run debate brings together an MP, economist, journalist and campaigner for a highly charged debate on the potential impact of the UK’s split from the European Union.

3 min read

The UK can benefit from a host of trade opportunities after Brexit but risks putting “a ceiling” on young people’s futures – just two views expressed during a lively debate on Britain’s post-Brexit future held at Coutts.

Four panellists – a politician, trade expert, campaigner and writer – fiercely debated whether or not Britain would have a bright future in front of an audience of Coutts clients.

The speakers included Shanker Singham, Director of the International Trade and Competition Unit at the Institute of Economic Affairs, who has been dubbed the ‘brains of Brexit’. He said “we have to maximise the opportunities that Brexit provides and minimise the disruptions”, adding that there were plenty of potential positives for the UK in terms of trade when it leaves the European Union (EU).

“The US wants to have a trade agreement with the UK, they’ve made that abundantly clear on a number of occasions,” he said. “The EU has offered us a comprehensive trade agreement for the whole of the UK.

"The biggest regional agreement that, if the UK joined, would actually constitute about 50% of the global economy is the Trans-Pacific Partnership. We should join that. The Japanese want us in that.”

But Femi Oluwole, spokesperson for pressure group Our Future, Our Choice, spoke powerfully about the potentially negative impact Brexit could have on young people.

“Brexit closes down our options,” he said. “At the moment, we have the right to live, work and love in 31 countries across Europe – that is the future that we have as an EU member. And we lose that. We put a ceiling on the actual economic futures of our young people by this Brexit thing.

“That is not a bright future for the country.”

He added, “In 2016 Brexit was four words – leave the European Union. Right now it’s a 585-page treaty which most people who voted for Brexit do not like.”

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“The US wants to have a trade agreement with the UK, they’ve made that abundantly clear on a number of occasions.”
Shanker Singham, Director of the International Trade and Competition Unit at the Institute of Economic Affairs

Back to basics

Stella Creasy, Labour MP for Walthamstow, came to the event straight from a Brexit debate in the House of Commons. She also argued that Britain’s future would not be bright after the UK-EU split.

She said, “When we look at the basics of what people doing business in our country actually need, then absolutely we can see that Brexit creates challenges rather than solves them.

“We haven’t even left the European Union yet and we already have lower GDP – 2.3% of GDP growth gone, around £47 billion a year of activity. What does that also mean? It means less in our tax take too – so less money to invest in the public services that keep our economy running.”

She also warned of more red tape.

“It is estimated there are 240,000 UK businesses that only trade with the EU that would now have to interact with the customs base in this country – and all that paperwork – for the first time,” she said.

Fourth panellist Ella Whelan, journalist, commentator and author, said Brexit would be “neither the death knell nor the magic pill that will cure or end the British economy”.

She told the audience that, while the UK’s departure from the EU would not be “the economic blessing we’ve all dreamed of”, it was important to challenge the idea that it would spell disaster for Britain’s economy.

“There’s no hard evidence that Brexit would trigger a spiral into an economic downturn,” she claimed.

 

The investment case

Coutts CEO Peter Flavel told the audience they shouldn’t let Brexit put them off investing.

“A lot of people talk to me about volatility and how risky the world is,” he said. “The FTSE 100 last year from January to August was pretty tough – flat. And then what happened? It got worse. So it’s better not to be invested, isn’t it?

“Well actually, if you think about when we first voted for Brexit, that’s nearly three years ago. What’s the FTSE 100 done since that day? Actually, in the nearly three years since, markets returned 27%*. Not being invested because of being scared of Brexit and scared of volatility – that’s what it’s cost.”

Never forget though that past performance should not be taken as a guide to future performance. The value of investments can go down as well as up and you may not recover the amount of your original investment.

 

The results are in

Following the debate, which was chaired by The Guardian’s Jonathan Freedland and held at Coutts’ London headquarters on Wednesday (20 March), the audience of more than 200 people were asked to vote.

The result of that poll was almost as tight as the referendum itself, with 51% saying they thought Britain’s future was bright after Brexit and 47% saying it wasn’t – 2% were undecided.

Read our thoughts on Brexit as shared with clients on a recent call.

* FTSE 100 from 24 June 2016 to 14 March 2019, with dividends reinvested.

 

When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.

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