Brexit shows it’s time for an economic shake-up from the Tories

The Brexit weather forecast remains distinctly foggy in all areas as we enter yet another crucial week in Westminster. Will we ever see daylight and opportunity out of this sickening political morass?

As I said to the BBC Question Time audience last week, I think this parliament ranks as the most dismal in living memory. It’s all so depressing. We urgently need some hope to break us out of this collective neurosis. Our politicians seem uncapable of breaking the logjam.

Let me write some words I never thought possible: maybe Jacob Rees-Mogg is right. Parliament should be suspended because it has been unable to sort the fundamental question of our days.

The so-called cockpit of the nation is on a permanent autopilot to nowhere. As this paper has so cogently argued for weeks – fundamentalists are wrecking public trust and confidence in our polity.

I have long thought that we need to shake things up. Perhaps the left versus right thing is going to be smashed up for good. It clearly doesn’t work anymore.

But while we wait for this political Godot to arrive, surely it is time to actually do something other than Brexit. And – despite Brexit, as they say – let’s actually get on with futureproofing our economy.

With that in mind, the chancellor needs to have two central concepts at hand at this crucial moment for the country.

Firstly, to keep plenty of economic powder dry if we end up with a hard Brexit. This is such a roll of the dice for our economy it gives me sleepless nights. In business we take risks – but we take calculated and not reckless ones. Forget Project Fear – we now can see the Project Reality of jobs and taxes will take being moved out of the UK. Right now.

So while the government magics up some cargo ferries to work on time, let’s also ensure Whitehall has enough people and fiscal power to manage the situation. As the Bank of England governor sought to calm the waters on the morning of 24 June 2016 – the next few months must see a relentless focus from the Treasury on building confidence through fiscal discipline.

But at the same time, the chancellor needs to fire up some fresh thinking to give UK businesses of all shapes and sizes and inward investors the confidence that political soundbites about being “pro business”actually mean something.

So let’s start with the Square Mile itself. In PwC’s recent report on the total tax contribution of the UK banking sector, there is a (modelled) international comparison expressing taxes borne (profit taxes, property taxes, bank levies, social security contributions and irrecoverable VAT) as a percentage of a model bank’s commercial profit. It’s not good news for the UK.

The UK has the highest effective tax burden against our key competitors – London is at 50.6 per cent, Frankfurt at 43.8 per cent, New York at 34.2 per cent, Singapore at 23.2 per cent, and Dubai at 22.7 per cent. Those levies don’t just put the UK sector at a competitive disadvantage by pushing up the costs of capital. They do something worse. Just at a time when our economy may need to have more firepower to support SME lending and underpin those complex international supply chains, we keep hearing that those higher costs will hurt.

I suggest we learn the lessons of the 2008 crisis and let banks have more capacity to lend.

Right now – for one of the highest export earners in the UK economy – the government needs to make a move. So while the chancellor should keep his firepower in place for now, he needs to set out a clear path to place the UK financial sector on a trajectory to support the economy through troubled times ahead.

Otherwise Singapore-on-Sea won’t be needed in the UK – for many Singapore itself will look very attractive place to be. And that’s not good for any of us.