The Chancellor’s Mansion House speech is always a grand black tie occasion – well, except for Gordon Brown, who insisted on wearing his working clothes – however sombre the economic outlook.
Everyone who sat down to slow-roasted beef with tender stem broccoli on Thursday was conscious Philip Hammond’s speech came on the eve of the second anniversary of the Brexit vote.
As he pointed out, his support for open markets and low-friction borders doesn’t make him, or the Treasury, the enemy of Brexit – to most business people that is simply common sense.
Chancellor Philip Hammond seen delivering his Mansion House speech at the Lord Mayor’s dinner on Thursday
As he spoke, the bombshell was still to drop from Airbus that it is about to become the first big manufacturer to withdraw investment from the UK due to Brexit uncertainty.
Frictionless borders are not an abstract concept to business leaders like Tom Williams, senior Airbus executive in the UK, who is responsible for an intricate flow of components around the world in a ‘just-in-time’ system where delays are measured in millions.
Williams’ worries echo those of John Neill, the chairman and chief executive of Unipart, who wrote in this newspaper that a hard Brexit is the biggest threat to the automotive industry in the UK since the militant trade unions of the 1970s.
Businesses like Unipart and Airbus are among the most efficient and competitive in this country, and their views deserve a hearing.
Car manufacturer BMW, which employs around 8,000 in the UK, has joined those warning about the consequences of Brexit uncertainty. Yet the complexities of supply chain management are lost on tribalist Brexiteers who wave aside all such misgivings as remoaning.
Brexit will have an enormous impact on other industries too, such as pharmaceuticals. GlaxoSmithKline has 16,000 ‘trade routes’ for its drugs with the EU, any of which could be disrupted.
Despite being told Brexit means Brexit, Ruth Sunderland says businesses don’t know what it means in practical terms
It is setting aside £70 million for contingency planning and £50 million a year for extra Brexit costs – money that could have been spent trying to cure cancer.
Airbus, a Franco-German business, is being accused of pursuing an anti-UK agenda and of crying wolf. But business leaders generally are not drumming up anti-Brexit sentiment.
Many of them privately view the vote two years ago as an epic act of self-harm, but avoid the subject in public for fear of upsetting the Government, offending a chunk of their customers and scaring their employees. The fact that Airbus and Unipart are speaking out is a sign of how serious this really is.
Despite being told Brexit means Brexit, businesses don’t know what it means in practical terms. Will the UK be a member of the single market? Will Britain be in the customs union, a customs union, or will we have maximum facilitation or some other plan? Yes, there will be a transition, but to what?
The UK economy has not fallen off a cliff as in the worst predictions of Project Fear, but there is good reason to conclude the vote has curbed growth.
The Government’s own independent fiscal overseer, the Office for Budget Responsibility, says that Brexit makes the public finances worse, not better, because the UK will be more closed to trade, investment and migration once it leaves the EU, which will in turn reduce tax revenues.
The economy is 2.1 per cent smaller than it would have been had the result gone the other way, according to a new analysis by the respected think-tank the Centre for European Reform. The hit to the public finances is £23 billion a year, or £440 million a week – higher than the £350 million promised on the side of the bus for the NHS.
In other words, there is no Brexit dividend, and it makes no sense to talk about one in terms of saved contributions to the EU in isolation from the performance of the economy.
The business leaders I meet don’t want to thwart the will of the people, they just want to get on with running the companies on which we depend for jobs, prosperity and the tax revenues that fund the NHS.