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Brexit economic boom will accelerate British growth if done properly, says Gerard Lyons

Daily Express :: Politics Feed 

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Investment plans have been put on hold by many firms because of uncertainty over Brexit. Sterling has also weakened, and is now cheap, at very attractive levels. In addition, the world economy has slowed sharply over the last year, with even Germany on the brink of recession. Brexit uncertainty and global slowdown has dampened growth here. Tomorrow the Government’s agenda will be outlined in the Queen’s Speech. Central to this agenda is the need for economic success. 

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The most important immediate economic development will be how and when we leave the EU. The latest signs are that the Prime Minister will secure a deal. This means leaving at the end of October. 

Then there would be a transition period during which a new trade relationship would be worked out. This possibility has already seen the pound rally. If it materialises, it would boost business confidence and investment.

In my view, Brexit is a great opportunity. It is chance for the UK to position itself in a world economy where 90 per cent of growth in coming decades is set to come from outside of Europe. 

There are also many things we should have sorted out when we were in the EU but didn’t. We need to address them now as the UK is an imbalanced economy. There are regional imbalances.

Also, there are some high productive and high wage sectors like The City but also too many firms with low productivity and low pay.  Thus a major economic reboot is needed and I think it is easier to achieve this outside the EU.

But can we afford it? Yes, because of the Brexit Dividend. This has two parts to it. The first part is that we will be better able to spend at home the large amounts of money we give to the EU. 

The second part of the Brexit Dividend causes controversy. The consensus view among economists is that this part will not exist as the UK will underperform once outside the EU. I disagree.

Outside the EU, there are many reasons to expect the UK economy to do better and grow at a faster pace than if we remained in. If it does then the economy will be bigger and government revenues higher. 

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It is not just leaving the EU but what we do afterwards that is key. Naturally, it makes sense to have a good future relationship with the rest of the EU. Hence the focus on the exit deal. 

But this deal needs to be a good one and must not tie our hands on future domestic economic policy or on our ability to cut trade deals across the globe. Hence the Prime Minister has been pushing for us to be outside the single market and customs union. 

One way to think about future policy is like three legs on a stool. Each needs to carry its weight for the economy to be strong. 

One economic leg is fiscal policy. As the Chancellor has already outlined, this means austerity is over, with increased infrastructure and spending on important areas, plus targeted tax cuts, when affordable.

The second, and often overlooked, will be what happens at the Bank of England. Monetary and financial policy is as important to future economic success as fiscal policy. 

Also a new Governor of the Bank of England is to be appointed soon and it is important that they have the authenticity and economic expertise to convey to international financial markets that Brexit is a great opportunity.

The third key leg of future economic success is the “supply side” agenda. This means removing regulatory obstacles that get in the way of success, while ensuring the right incentives are in place to boost output, investment and innovation. Protecting workers rights and safeguarding the environment are vital parts of this and will likely figure in our exit deal with the EU.

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To deliver a Brexit Dividend it is not just about leaving the EU. It is also about implementing the right policies once we leave. I am confident we will.

• Dr Gerard Lyons is a leading international economist who is one of the candidates in the running to be the next Governor of the Bank of England

https://www.express.co.uk/news/politics/1189913/brexit-news-economy-britain-growth-boris-johnson-eu-negotiation-latest-gerard-lyons

Investment plans have been put on hold by many firms because of uncertainty over Brexit. Sterling has also weakened, and is now cheap, at very attractive levels. In addition, the world economy has slowed sharply over the last year, with even Germany on the brink of recession.

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