Sunday, December 01, 2019
More Stoke-on-Trent than Singapore-on-Thames
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

General elections are occasions when political parties can set out their visions for the country, allowing voters to choose between their wares. Labour has done so emphatically, as discussed here last week. We can say, beyond any doubt, that the country would look very different after five years of a Jeremy Corbyn government.

But what about the Tories? They have come out with a manifesto so devoid of content and vision that they might as well have not bothered. If it was intended to be instantly forgettable, it was a great success. Otherwise, instead of the roar of a lion, we had the squeak of a mouse.

Now I know what the politics behind this was. The Tories were desperate to avoid anything that would get in the way of the central message of “getting Brexit done”. The ghost of Theresa May’s 2017 manifesto, and a social care plan hastily put together and presented to voters, and most of an unconsulted cabinet, hangs heavy over Conservative Campaign Headquarters.

Even so, the omens are not good. Readers will remember a time when enthusiastic Tory Brexiteers talked about creating a “Singapore-on-Thames”, a super-competitive, low-tax, de-regulated, enterprise economy after Brexit.

It was the kind of message that provoked concern elsewhere in Europe, and a bit of a pushback from some Singapore people, who protested that it was not the freebooting entrepreneurs’ paradise it was portrayed as. Even Philip Hammond, the former chancellor, talked of adopting a different model for the UK economy. In the immediate aftermath of the referendum three years ago, this newspaper advocated cutting the main rate of corporation tax to 10% to ensure that Britain remained a magnet for foreign direct investment.

Well, looking at what the Tories have in mind for the next five years, it looks like more of a case of Stoke-on-Trent or Stockton-on-Tees than Singapore-on-Thames. Both are estimable places. Stoke was the pottery capital of the world and Arnold Bennett, one of my favourite authors, is one of the city’s most famous sons. Stockton can lay claim to the railway heritage of George Stephenson and the inventor of the friction match. People in both places would also accept, however, that a successful past is no guarantee of a glorious present; far from it.

Under the Tories’ modest proposals, the main rate of corporation tax will stay at 19%, rather than being cut to 17%, as previously planned, so a lot higher than 10%. Beyond the announced rise in the National Insurance threshold to £9,500 next April, there is no obvious room for tax cuts if the party is serious about meeting its fiscal rules.

The starting position on tax is what the Institute for Fiscal Studies (IFS), describes as the “highest sustained level” for the tax burden since the late 1940s, when the economy was being brought down from a wartime footing. Most other European economies have a higher tax burden than Britain, it should be said, and under Labour it would be higher still. But the Tories under Boris Johnson appear to have shed their ambitions to be a low-tax party.

Sunday, November 24, 2019
Labour's four-day week is just a terrible waste of time
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

Sometimes you are just spoiled for choice and, suspend your disbelief for a second, on this occasion it is the politicians who are spoiling us. The Tories will be revealing all in their manifesto today, an odd day for a launch, but they will have to go some to match the cornucopia unveiled by the Labour party on Thursday.

There is enough in Labour’s manifesto for not one, but a dozen columns. Fortunately there is a cut-off date, December 12, to stop me doing that.

At its heart is a simple message. The Tories, with their cruel austerity, have been the party of food banks, rough sleeping and “communities blighted by lack of investment, endless cuts to vital services and millions struggling to make ends meet, while tax cuts are handed to the richest”. Labour had a go at an austerity-based campaign in 2017, and it worked quite well.

This one goes further in its ambitions for public spending, including higher public sector pay, raising the increase in NHS spending from 3.4% to 4.3% a year, abolishing tuition fees, the £500m-plus annual running costs of British Broadband and £10.8bn a year for free social care for the over-65s.

That will add more than £80bn a year to day-to-day government spending by 2023-24, on top of which there will be a £400bn National Transformation Fund. The latter will be funded by borrowing, the former by a very precise £82.9bn of additional taxes, equivalent to 4% of gross domestic product.

The 45% income tax rate applicable at £80,000 and the new “super rich” 50% rate at £123,000 will raise £5bn a year, putting corporation tax back up to 26% and a new unitary tax on multinationals £30bn. Higher taxes on capital gains and dividends will be worth £14bn a year, a financial transactions tax £8.8bn. And so on, Labour says it has taken into account behavioural changes in calculating its £82.9bn tax hike, which others will dispute, as they will dispute the idea that 95% of taxpayers will be unaffected by these changes, a claim that Paul Johnson, the saintly director of the Institute for Fiscal Studies, has described as “simply not credible”.

There is also, of course the biggest programme of nationalisation since the Attlee government of 1945-51. Private landlords will not be forced to sell to tenants at a discount but they will face rent controls. There will be a pilot programme to test whether a universal basic income works. I can save them the time and money. It doesn’t.
I could go on. But I need to pin something down and I choose Labour’s policy of promising a four-day, 32-hour week within a decade. It says more about how Labour thinks the economy works, even than all of the above.

It is an odd policy, intended to be populist but regarded with scepticism and even amusement among those it is intended to persuade to vote Labour. Boris Johnson was laughed at in last week’s ITV leaders’ debate when he said that telling the truth was important – he has been hauled up for telling porky pies even about pork pies -and Jeremy Corbyn was when pressed on the 32-hour week.

John McDonnell, the policy’s architect, commissioned a sympathetic academic expert, the eminent economic historian Lord Skidelsky, to examine the policy, which he did in a paper published earlier this year by the Progressive Economy Forum, called to How to achieve shorter working hours. But he declared that “capping working hours nationwide, on the lines of France’s 35-hour working week, is not realistic or even desirable, because any cap needs to be adapted to the needs of different sectors”.

Labour, according to the argument set out by Corbyn in the debate, and repeated in the manifesto, would square the circle of a four-day week, ensuring workers do not suffer pay cuts or firms big increases in costs, by raising productivity. As the manifesto put it: “Labour will tackle excessive working hours. Within a decade we will reduce average full-time weekly working hours to 32 across the economy, with no loss of pay, funded by productivity increases.”

Let us think about that for a second. The absence of productivity growth is the problem that has bedevilled economists and policymakers for a decade. Labour thinks productivity can be revived by dictating a maximum working week of 32 hours. Would firms invest in such circumstances to bring about the necessary productivity revival? I think not.

Sunday, November 17, 2019
Wages up, jobless down, but confidence is lacking
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

Students of British election history will know that official figures can often scupper the best-laid plans of political parties. Bad trade figures, by legend inflated by a couple if jumbo jets, famously helped cost Harold Wilson, the Labour prime minister, a general election in 1970 he was expected to win. The release in May 2016 of official figures showing a record figure for net migration the previous year changed the nature of the referendum debate and helped swing a leave vote the following month.

So it is with some trepidation that ministers, who no longer see the figures in advance, will have awaited the latest batch of economic numbers. But it is, for then, a case of so far, so good, for the economic figures, if not the latest NHS performance data. Third quarter gross domestic product was softer than expected, up just 0.3% and the 12-month rate of growth was the weakest since 2010.
Importantly, however, the economy escaped the political elephant trap of a recession.

There were also dangers for the government in the latest labour market statistics. But, despite some softening, including a 58,000 fall in employment in the latest three months, the news was good enough to provide, in normal circumstances, an election-winning platform.

The unemployment rate dropped back to 3.8%, its lowest since the mid-1970s. Real wages are rising, with the growth in money wages, 3.6%, running at twice the relevant inflation comparison. 1.8%. The day after those figures were released, other official data showed a further drop in the inflation rate, to just 1.5%.

The job market is not perfect. Vacancies have been falling since the turn of the year and the drop in employment in the latest three-month period told us that for some workers, particularly women, the job market is softening. All the fall and more was, however, accounted for by a drop in part-time work while full-time employment rose.

So a sigh of relief for the Conservatives. And, if you believe, as pollsters used to tell us, that all elections are “pocketbook”, or wallet and purse, elections, these figures should support what the polls are telling us, that the Tories will certainly emerge as the largest party on December 12, and could easily secure a comfortable majority.

These things are not perfect. I remember telling Michael, now Lord, Heseltine in the run-up to the 1997 election that a strong labour market and rising real wages did not guarantee victory. Labour lost in 1979 in spite of this, probably because of the “winter of discontent” of strike disruption, while the Tories succumbed to a Labour landslide in 1997 because of divisions on Europe, sleaze and memories of the 1992 “Black Wednesday” European exchange rate mechanism humiliation.

Is there anything to hold the Tories back this time? Boris Johnson does not offer voters huge reassurance and lacks a grasp of detail, or that may just be his style, but there are more public doubts over Jeremy Corbyn than there are about him. Johnson’s simple pitch of getting Brexit done may be inaccurate but will be effective with many voters.

The question is whether there is anything in the performance of the labour market to prevent it delivering for the Tories. Those of us who have lauded the job market’s performance in recent years – 3.5m net new jobs created since 2010 – have always had to contend with the criticism that, not only has this occurred against the backdrop of stagnant productivity, which continues, but that wages have been weak and many of the jobs created insecure.

A related strand of criticism of the labour market’s performance is the focus of a new Resolution Foundation report. The report, Feel Poor, Work More, takes a different approach to the employment “miracle” of recent years, with more jobs created than anybody thought possible.

Sunday, November 10, 2019
Spend, spend, spend, but beware the bond market
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

This is turning into an autumn of cancellations, not of trains because of leaves on the line, though no doubt there have been some of those, but of economic events. Last Wednesday was supposed to be Sajid Javid’s first budget but it was cancelled because of the election, the day after the chancellor insisted it would go ahead.

On Thursday, the Office for Budget Responsibility (OBR) intended to produce a “forecast restatement”, taking into account changes since its last assessment in March, notably the different treatment by official statisticians of student loans; which has added to borrowing. But this was cancelled too on the advice of the cabinet secretary, Sir Mark Sedwill, who said it would be in breach of the cabinet office’s election guidance.

Similar considerations led Sedwill to intervene in another cancelled event, the costing by Treasury officials of Labour’s spending plans, due to be published by Javid in a flourish, though as you may have seen elsewhere in the paper, they have found their way into the public domain.

When so much is being cancelled, what is a chap to do? Fortunately, there is plenty to fill the vacuum. The Institute for Fiscal Studies, which provided the OBR with its chairman, Robert Chote, stepped in on “the budget that never was” day the declare that the era of deficit reduction is at an end, and that the combination of statistical changes and the extra spending announced so far, will see the budget deficit – public sector net borrowing – rise above £50bn this year and next, from just over £40bn in 2018-19.

The increases will mean a budget deficit of more than 2% of gross domestic product, the old fiscal target, albeit one which was dropped by the chancellor in his speech on Tory spending priorities on Thursday.

What are voters to make of it? This election means that the end of austerity has come with a bang not a whimper. To adapt the old phrase, £100bn here, £100bn there, and soon you are talking about real money.

You will be pleased to hear that I am not going to go through every jot and tittle of the parties’ spending plans. The Green Party can, I think, claim an early victory in the spending-fit-to-bust stakes, with its plans for £1 trillion of extra spending over the next 10 years to deliver a greener economy. After taxes, that would add a gloriously precise £91bn a year to the budget deficit.

Both Labour, in the form of the shadow chancellor John McDonnell, and the Tories, through Javid, have ambitious plans for infrastructure spending. Under the Tories, it would be around £20bn a year higher than at present, averaging about £70bn a year in today’s prices over the next few years, according to the IFS. His aim is £100bn of extra infrastructure spending over five years.

McDonnell, promising “investment on a scale never before seen in this country” would, according to the IFS and Resolution Foundation, pledge to deliver £55bn a year of extra infrastructure spending, more than doubling it from current levels to roughly £100bn a year, approaching 5% of gross domestic product. There is a serious question about whether this amount can be spent wisely or, given capacity constraints, spent at all.

Both parties are, then, committed to a lot more infrastructure spending, borrowing to invest. Javid has constrained himself more than McDonnell, by adopting new fiscal rules that will prevent too much of a splurge and to try to constrain Boris Johnson, who does not come over a s fiscal conservative.

Those rules are for a balanced budget defined by current, or day-to-day, spending, a rule that already looks quite tight; the National Institute of Economic and Social Research suggests that it is already on course to be broken. There would also be a limit of 3% of GDP on infrastructure spending and a commitment to change tack if borrowing costs rise. McDonnell would target public sector net worth, an acknowledgement of the fact that infrastructure spending creates assets, and set a higher limit on any rise in borrowing costs. Whatever the rules are, recent experience would suggest that they are there to be broken.

What does it all mean? Is it, as the free market think tank the Institute of Economic Affairs says, that both parties have “abandoned fiscal restraint” in favour of more borrowing? Lord Macpherson, former permanent secretary to the Treasury, its senior civil servant, asks whether the fiscal proposals of the two main parties have ever been “so incontinent”.

Well, while Labour and Tories will always go out of their way to emphasise their differences, some things unite them. Both have seen the opportunity, in current very low borrowing costs, to push the boat out on infrastructure spending. The scale may vary but the logic is identical.

Sunday, November 03, 2019
Beyond Punch & Judy, some good ideas for the economy
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

It is hard to feel much enthusiasm for a general election nobody really deserves to win, and which seems certain to be dominated by Brexit. Financial markets, taking their cue from betting markets, are seeking reassurance in the prospect of a Tory majority. I would warn them that the betting markets have not covered themselves in glory in recent elections and referendums, and that Theresa May was a hotter favourite in 2017 than Boris Johnson is now, and achieved a bigger share of the vote then (43%) than the Tories are polling now.

The last Tory leader to win a comfortable majority was Margaret Thatcher in 1987, more than three decades ago, the majorities achieved by John Major in 1992 and David Cameron in 2015 being uncomfortably small.

As for the outcome and Brexit, a Tory majority would probably not deliver Brexit by Christmas, as ministers are suggesting, but should do so by January 31. The Tories as the largest party in a hung parliament would have to make concessions on labour rights and possibly customs union membership to secure support for its withdrawal agreement.

Labour, say in power with the support of the Scottish National Party, would negotiate a softer Brexit and put it to a second referendum, opening up the prospect of a very long goodbye. In all cases, of course, we are not talking about “getting Brexit done” but merely bringing an end to the first phase. It is not a happy thought but there are years to come of this.

The question is what we should be hearing from the parties apart from Brexit. How do we prepare for a successful post-election and, eventually, a post-Brexit economy?

I commend, in this regard, the efforts of the newly-formed Policy Reform Group (PRG), whose recommendations are published under the auspices of the National Institute of Economic and Social Research (NIESR). The group includes John Llewellyn, Jeremy Greenstock, Russell Jones, Andrew Gowers, Preston Llewellyn, Nick Greenstock, Gerald Holtham, Terry Scuoler and Rhys Bidder. A range of other authors has contributed to its policy ideas.

John Llewellyn, a former chief economist at the Organisation for Economic Co-operation and Development (OECD), who now runs his own consultancy, says that nobody else has attempted such a comprehensive review of UK policy-making, which includes recommendations not in the economic sphere. He is also aware that most people will not agree with all of the PRG’s ideas, called Beyond Brexit: A Programme for UK Reform but that the aim is to stimulate debate.

Let me take five of the proposals. Readers wanting more can find them in the latest National Institute review, published last week. The first proposal is, I think, uncontroversial, which is that Britain, still operating with 20th or even 19th century infrastructure, needs an urgent renewal of energy, water, transport and communications infrastructure. Sajid Javid, the chancellor, planned to announce a big rise in infrastructure spending in the “budget that never was” on November 6.

Historically, the UK has invested too little in infrastructure. The remedy is to set a target of 3.5% of GDP, which the OECD regards as the norm for developed economies, for public and private sector infrastructure spending. Currently the UK spends just over 2% of GDP. The National Infrastructure Commission could, the report says, evolve into a National Investment Bank, with infrastructure bonds used as source of funding.

Housing is infrastructure and another set of suggestions from Kate Barker in the report, is for redesigning housing policy. Barker, who undertook reports on housing supply for the last Labour government, when she was a member of the Bank of England’s monetary policy committee, advocates an increase of 100,000 a year in the number of social homes being built, to alleviate the “real and acute” crisis, particularly at the bottom of the market.

Though she is on the board of Taylor Wimpey, the housebuilder, she also advocates the winding down of the “much-criticised” Help to Buy scheme, to be replaced by a capital sum for young people which could be used towards the purchase of existing as well as new homes.

Sunday, October 27, 2019
All dressed up for the budget, but nowhere to go
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

In all the years I have been covering budgets, I cannot remember the run-up to one, for that is what until Thursday night we were in, to be quite as odd as this. Maybe that was why the usual full pre-budget speculation mode, my e-mail inbox overflowing with budget demands from everybody from the CBI, Institute of Directors and British Chambers of Commerce to the Federation of Licensed Victuallers Associations, was more muted than normal.

The budget, it seems, has fallen foul of the government’s parliamentary game-playing, cancelled because of the opposition’s expected refusal this week to go along with the prime minister’s plan for a general election on December 12.

Incidentally, I know that many people reading this are thoroughly fed up with what seems like a never-ending process for what, after all, is only the first stage of Brexit, and blame a “Remainer” Parliament for its dithering and delay. In fact, if it is to be a missed deadline, the blame for that lies squarely with Boris Johnson and a gimmicky Downing Street operation, whose gimmicks have all failed.

The prime minister, with very little time on his hands, wasted it with an initial policy of not talking to the EU, an unlawful prorogation of Parliament and then a very late set of proposals which were swiftly amended when unacceptable to Brussels. To expect Parliament to rush his deal through to meet his vanity project of leaving on October 31 was a final push too far.

We should be glad that the courts, and Parliament, have prevented a government from riding roughshod over convention and proper procedure. This not a pro or anti-Brexit point; once this has happened once a future government could use the precedent established for more sinister purposes.

The need for proper Parliamentary scrutiny, by the way, is underlined by the fact that neither the prime minister nor his Brexit secretary appear to understand what they have conceded on Northern Ireland and what it will mean for business. Details matter.

Anyway, back to the non-budget and at times like this, I feel sorry for Sajid Javid, the chancellor. On Wednesday he was reassuring Robert Peston on ITV that there would be a budget on November 6, and that the only circumstances in which there would not be a budget on November 6 would be if Britain left the EU without a deal.

The chancellor, who had a rushed one-year spending review imposed on him by 10 Downing Street last month has now had the budget cancelled from under his feet.
I also feel sorry for Treasury and Office for Budget Responsibility (OBR) officials who were hard towards the expected budget in 10 days’time. Whether we will see the fruits of their labours remains to be seen, though under the Industry Act the government is required to publish two official forecasts a year, and there is not that much time left.

The question is whether this postponed budget is a lucky escape for the public finances. After all, we had one pre-election giveaway in the spending review last month, in the form of a £13bn-plus spending boost for next year.

The backdrop to the Treasury’s preparations, frustrated as they now are, was that, for the first time in many years, the public finances are deteriorating. Borrowing last month was up on a year earlier and, in the first half of the fiscal year, the government borrowed £40.3bn, an increase of £7.2bn, or 22%, on the corresponding period a year earlier. Not for five years has April-September borrowing shown a rise.

Sunday, October 20, 2019
Can the next Bank governor avoid negative interest rates?
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

Is there a light at the end of the tunnel? Can we, for a time, focus on something else than Brexit? Yesterday’s vote in the House of Commons suggested that we may yet have to wait a while before sounding the all-clear, but the omens are better than they were, though the long-term implications of the prime minister's approach, discussed here last week, will still have to be taken into account.

In an election, which must come soon, the Tories will now be campaigning on their deal, the revised withdrawal agreement and what looks like a permanent “backstop” arrangement for Northern Ireland concluded with the EU last week, rather than a no-deal Brexit. The risk of the most destructive form of Brexit, crashing out without a deal, has diminished further. The government moved quite a lot in the last couple of weeks to avoid a no-deal Brexit and the EU moved a little. That is a good thing.

We analyse all this and the implications of yesterday’s parliamentary business, elsewhere in today’s paper. Let me instead focus on the possibility of other things happening once the Brexit logjam is cleared. Sajid Javid, the chancellor, has announced that should a deal with the EU be concluded, and that Britain leaves on October 31, his first budget will come less than a week later on November 6. We shall see.

The other aspect, which I wanted to concentrate on today, is the Bank of England. The Bank is awaiting the announcement of a new governor to replace Mark Carney, who may yet have a future in Canadian politics, and they should have known by now.

The chancellor has insisted that the process is on track to have a new governor in place by February 1 is “on track”, though that merely repeats the language used by Philip Hammond, his predecessor. He thought it best to leave the task to his successor. The complication for Javid is that, if there is to be an election, appointing the next governor ahead of a potential change of government could handing them a poisoned chalice.

I would love to be able to tell you today who the new governor is going to be. But most of the candidates have been keeping their heads down and, as far as I know, are as much in the dark as any of us. Most of the bookmakers who were taking bets on it appear to have lost interest.

One potential candidate who has raised her head above the parapet, the “superwoman” fund manager Helena Morrissey, wrote in the Spectator that a prerequisite for success is “a willingness to think about old problems in new ways”. I tried that one in an interview once.

She comes over as a bit of a devaluationist in hoping the Bank “will recognise the fantastic opportunity for export-led growth” offered by the pound’s referendum fall. As someone who has ploughed through more of the Bank’s analysis than I care to remember, I can confirm it has been looking very hard for such growth in the past three years.

Morrissey wants the new governor to be convinced that Britain has a bright future. Carney certainly did when he became governor in 2013, though his optimism has been tested more recently.

Perhaps most interestingly of all, Morrissey thinks the next governor should have no truck with negative interest rates. That is a hot topic among central bankers. One of the European Central Bank’s key interest rates, the deposit rate, has gone even more negative, at -0.5%. The Bank of Jpaan has had negative interest rates for some time.

Saturday, October 12, 2019
The long and the short of Johnson's Brexit deal
Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on This is an excerpt.

The shift from extreme pessimism to optimism in recent days over an early agreement on the terms of Brexit was as sudden as it was welcome. Sterling, that reliable Brexit barometer, led the celebrations, with tis best two-day performance in a decade, though I note it is only back to where it was when Boris Johnson succeeded Theresa May as prime minister.

A lot has changed. It seems there will be a customs as well as regulatory border in the Irish Sea, though complex arrangements will still allow Northern Ireland to benefit from an tariff reductions negotiated by the UK in trade deals. The Democratic Unionist Party will not have a sole veto on regulatory alignment between Northern Ireland the EU. The Johnson backstop is a variation on May’s but may yet be workable - and indeed is similar to what the EU proposed some time ago - and for the first time the prime minister has shown some statesmanship. We will see this week whether there are further lurches on the rollercoaster.

The government, sensibly, wants to avoid a no-deal Brexit, as do Ireland and the EU, and the Institute for Fiscal Studies reminded us a few days ago why. Its green budget, in conjunction with Citi, showed that no-deal would lead to recession, and an economy 2.5% smaller than otherwise after three years. Add that to the effect on the economy of the referendum itself, and there is a 5%-6% hit to gross domestic product over six years.

Under a no-deal, the government would also borrow a lot more. The IFS has added the extra public spending announced by Sajid Javid to the effects on the public finances of a no-deal, to estimate that by 2021-22 the government will be borrowing around 4.5% of gross domestic product (GDP), or more than £90bn, and government debt will be up to more than 90% of GDP.

The short-term matters; the long-term even more. Amid all the excitement over the cliff-edge, and the need to avoid falling over it, the long-term consequences of the kind of future trade deal with the EU envisaged by the Johnson government, if it is around for long enough to negotiate one.

I am indebted therefore to the think tank, The UK in a Changing Europe, which has filled an important gap in our understanding. Its report, The Economic Impact of Boris Johnson’s Brexit Proposals, will be published this week. It has been written by Hanwei Huang, Jonathan Portes and Thomas Sampson, with contributions from Matt Bevington and Jill Rutter. The think tank is based at King’s College, London, but the report also used the trade model developed by the Centre for Economic Performance (CEP) at the London School of Economics.

The Johnson proposals differ from those envisaged by Theresa May’s government in a number of important ways. While she committed to maintaining similar regulatory standards for agriculture and manufactured goods, and a “level playing field” on labour and environmental standards, the Johnson government has said it wants flexibility. May would have kept the whole of the UK in a customs territory with the EU.

Taking these and other differences into account, the think tank concludes that while the May government could have negotiated a future “Canada-plus” (or even plus-plus) trade agreement, or perhaps something even closer such as Turkey’s deal with the EU, the Johnson red lines will only allow a “bare bones” trade agreement, which they describe as Canada-minus. The UK, in other words, would have a trade agreement which is less comprehensive than that negotiated between the EU and Canada. Tariff would be eliminated but significant non-tariff barriers would be in place. It would be a long way from what business currently enjoys as a result of single market membership.