The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

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Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

Signalling a post-Brexit industrial strategy

Supporting Bombardier - Putting employment in Britain at the heart of economic policy.

Robert Oulds

25th September 2017

We are determined that Brexit, if when it eventually happens in earnest, delivers the change we need. One of these new approaches can be in defending British industry, along with its jobs and innovation from unfair actions. But why wait for Brexit? It can begin now!

 

Bombardier, a major employer in Britain, a new entrant in the plane market, is being threatened by a trade complaint brought by Boeing designed to keep it out of the US market.[i] Theresa May’s government must show that a post-Brexit Britain will use its new-found independence to stand up for UK jobs. A policy area where we would not have to live with pan-EU rules any more. British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country.


 

What should the Government do?


 

The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier his government will cancel its taxpayer-funded contracts with Boeing.[ii]


 

Theresa May should follow suit and review all taxpayer contracts with Boeing, until the company withdraws its threat to close British factories. This would be a real show of commitment to a UK-focused industrial strategy.


 

Some in a resurgent Labour Party at their conference in Brighton are attempting to undermine the spirit of the referendum by keeping the UK tied in as closely as possible to the EU for as long as possible. They seem to be pushing at an open door. The Government has accepted an EU transition with some of the obligations of membership, minus the influence, as proposed by our Prime Minister in her recent speech in Florence.


 

Taking such an approach to its extremes means not only accepting EU control over trade but also its undue influence over our industrial strategy and EU procurement rules and tendering.


 

Since the referendum progress has been made. The initial stages of Brexit have already been a boon to employment.[iii] British manufacturing has grown since the referendum.[iv] This has largely been driven by increasing export demand.[v] The rebalancing of the British economy should have little to fear from Brexit. The potential extra costs of tariffs placed on British exports to the EU is more than mitigated by the reduction in the value of the pound.[vi]


 

Despite this fear still pervade British politics, infecting some areas of business confidence.[vii] Steps were taken to alleviate the naysayers’ predictions of gloom if the UK was fully free to implement its own policies. Some supply side reforms were proposed. Yet, talk of a low tax UK alternative to the dilapidated EU (Franco-German model) has been muted of late. This backtracking away from boldness does little to restore confidence. The other approach now adopted by the Government is one making renewed concessions to the EU. This has problems of its own.


 

Any half-hearted Brexit, any postponement, any delay is a denial of the referendum result and just as importantly a rejection the opportunities that await UK plc after Brexit. If the rediscovery of Thatcherite classically liberal economic policies is no longer on the agenda then a new approach is needed.


 

We want to make sure Brexit is a success, but we are now further than before from being able to make the right choices for ourselves. Yet, the Government can show that despite some recent mixed messages, which fail to appreciate the opportunities that await us, there is still another way to signal that it will make Brexit a success.


 

The Government can restore confidence and outline a better tomorrow by showing that it will protect the employment gains that have recently been won and much more than that protect and enhance high-end manufacturing, creating well-paying jobs that add value to the economy. The government can signal that it will do what is necessary, taking back control must mean something.


 

To mitigate the fears and genuinely to secure the best outcomes for the British economy a self-governing country will have many decisions to make. Brexit has the potential to be a huge opportunity for many organisations, especially our excellent manufacturers. One of these threatened employers is Bombardier.


 

Defending a respected company – alongside Canada, a potential new global trading partner - will show that we have much to gain from Brexit. This must begin now and this is a real issue that needs to be addressed, not just for its totemic importance but also because jobs in this country depend upon it.


 

Bombardier is a well-known maker or trains, which has suffered before because of the UK’s over officious implementation of EU procurement rules awarding contracts to German rivals Siemens. [viii] There is now a new issue where the Government can step in to help its plane-making division in a dispute with American rivals Boeing. Bombardier is trying to break the duopoly of Boeing and Airbus in the production of smaller commercially sold planes. These pricing from there powerful rivals is having the effect of squeezing Bombardier.[ix] [x] What is worse, is that Boeing is trying to push Bombardier out of the US market altogether. The Canadian Government of Justin Trudeau has warned Boeing that if it does not stop bullying Bombardier through the courts his government will cancel its contracts with Boeing.[xi] The British Government should follow suit and review all contracts with Boeing.


 

Of course, a real solution is only fully achievable when we ae outside of the EU but it can ward off Boeing’s aggressive action and make them think twice about the long term, implications of its legal action in the US courts. Through signalling such an approach the remoaners that fear change, even in the Labour Party will see, that Brexit can be a real opportunity.


 

British taxpayers give Boeing hundreds of millions of pounds in defence deals, while at the same time they’re trying to close British factories. That’s not the action of a trusted partner for this country. Theresa May, stand up and support workers in the UK.


 

Its not just about defending Bombardier and the production of its C Series aircraft. There are also over 200 UK suppliers directly provide materials, hardware, equipment, and services for this planes production. The Belfast facility plays a critical role in C Series production and advanced composite wing assemblies.


 

Boeing’s petition to the US International Trade Commission (ITC) is a direct attack on innovation, competition, and development, which would ultimately harm the industry, consumers, and workers. Boeing’s petition would hinder future investment and domestic job growth in the UK. Northern Ireland leaders have asked Vice President Pence to interject. They fear peace in the region could be in jeopardy over job loss.[xii]


 

If Boeing is successful, Bombardier’s C-Series aircraft could be pushed out of the American market. The Times wrote “Boeing says it believes that "global trade only works if everyone plays by the same rules of the road. The company [Boeing] should heed its own advice before condemning others.”[xiii]

 

Theresa May announced that she phoned President Trump to raise concerns over Northern Ireland jobs.[xiv] Yet that is not enough. Theresa May knows what can be done and can follow Canada robust example. Justin Trudeau and Theresa May held a meeting to discuss the Boeing-Bombardier trade dispute in Ottawa on Monday 18th September.[xv]

Boeing’s protectionist complaint is unjustified. If successful, it would lead to job losses in this country, harming UK manufacturing. Taxpayer contracts with Boeing should be suspended until Boeing commits to withdrawing its complaint against Bombardier. The Government must use every weapon in its armoury to protect British workers.

 

This should be the message of what a post-Brexit Britain will be like. We will then see business confidence return.


[i] http://uk.businessinsider.com/bombardier-calls-boeing-trade-lawsuit-pure-hypocrisy-2017-9

[ii] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[iii] http://blog.fxpro.co.uk/daily-forex-outlook/14092017-uk-unemployment-at-42-year-low/

[iv] http://www.cityam.com/272260/british-manufacturing-now-eighth-largest-world

[v] https://www.theguardian.com/business/2017/sep/05/factory-and-retail-sales-climb-despite-fears-of-brexit-slump

[vi] http://www.brugesgroup.com/images/papers/whatitwilllooklike.pdf page 32

[vii] http://www.independent.co.uk/news/business/news/brexit-latest-news-uk-business-low-level-confidence-lloyds-bank-economy-a7920101.html

[viii] http://www.telegraph.co.uk/finance/newsbysector/transport/10119477/Bombardier-blow-as-Siemens-wins-1.6bn-Thameslink-deal.html

[ix] https://www.economist.com/news/business/21693188-wounded-canadian-planemaker-announces-big-losses-and-job-cuts-bombardier-course

[x] https://www.economist.com/news/business/21729469-row-between-planemakers-has-become-political-boeing-takes-flight-hypocrisy

[xi] http://money.cnn.com/2017/09/18/investing/trudeau-boeing-bombardier/index.html

[xii] http://ca.reuters.com/article/topNews/idCAKCN1BO19Y-OCATP

[xiii] https://www.thetimes.co.uk/article/air-fair-55r92xlpl

[xiv] https://www.thetimes.co.uk/article/may-pleads-with-trump-to-help-save-british-jobs-boeing-bombardier-democratic-unionist-party-hw93jf3bn

[xv] https://globalnews.ca/news/3736751/boeing-bombardier-justin-trudeau-theresa-may/

No Transition is Better than a Bad Transition
Financial Services and Brexit
 

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Monday, 23 October 2017