It has now been three years since Brexit on 31 January 2020, when every debate was dominated by “Brexit” being prefixed with “hard”, “soft”, “deal” or “no deal” etc. Then another word took over which was “Covid-19” which continued until the new word of the moment which is “Ukraine”. It is safe to say these words have dominated the political landscape in the last three years.
Without wishing to judge whether or not Brexit was a success and to avoid the political rhetoric, it would be interesting to ponder whether Brexit will stand the test of time. In order to do this, we need to look forward and take a circumspect view of what has happened as it is impossible to compare what the position would be if the UK had stayed within the EU.
Could we improve on what has happened, but this would be pure conjecture. Brexit was supposed to deliver freedom for the UK to break free from the shackles of EU bureaucracy. There was no deal on financial services, a shrewd ploy on part of the EU’s chief negotiator Michel Barnier clearly intended to weaken the UK economy as a punishment for leaving the EU. At this time Rishi Sunak, as the then Chancellor of the Exchequer, came up with the “Big Bang 2.0”.
The UK intended to gain a comparative advantage by deregulation of the financial services industry akin to what occurred in the 1980s. To do this now, there has to be an implementation of deregulation in order to seize the opportunity and to simulate growth which the UK economy desperately needs. Otherwise the International Monetary Fund’s (“IMF”) prediction that the UK economy shrinking by 0.6% may become reality. IMF predictions of the UK economy have previously been wrong so there is still room for re-evaluation. This will depend on Rishi Sunak turning the Big Bang 2.0 into reality now that he is the UK’s prime minister as he can influence the UK’s destiny. The signs are all looking good with growth in exports for financial services to Singapore, Switzerland and the USA. With less barriers to entry, the theory is there will be more innovation and more market entry which will lead to an increase in long term productivity, not only is the pace at which this deregulation slow but certain decisions of late the UK Government’s desire to regulate cryptocurrency seems counterintuitive to Big Bang 2.0.
