Wednesday, August 2, 2017

Britain’s Brexit Blunders

London disarms on taxes while hurting itself on immigration.

By The Editorial Board
The Wall Street Journal
August 2, 2017

Theresa May’s government is deeply divided over Brexit, but one trend is emerging: Her ministers seem determined to get their negotiating priorities backward. Witness a growing resistance to compromise with the European Union when compromise would be best for Britain, coupled with unilateral policy disarmament on issues where Britain should carve out a new path.

An example of the latter comes via Chancellor Philip Hammond’s promise that Britain won’t cut taxes and regulations to compete with the EU. He told Le Monde this week that Britain will “remain a country with a social, economic and cultural model that is recognizably European,” including a tax take as a percentage of GDP around the European average.

This is self-destructive. Brexit is supposed to allow Britain to shed onerous taxes and cumbersome regulations. The U.K. will have to do both to attract investment despite the costs of probable new trade barriers with the EU and the weaker pound. Mr. Hammond’s unilateral economic disarmament is a mistake for the ages.

Meanwhile, members of the cabinet are holding firm on their determination to block immigration from the EU. A spokesman for Mrs. May on Monday promised free movement of people would not “continue as it is now” after Brexit. Yet the economy can’t grow without immigrant labor, given the skills shortages in the tight pre-Brexit labor market. Intransigence on immigration will also make it harder for London to negotiate a more open trade deal with the EU.

June’s election fiasco has dimmed Mrs. May’s enthusiasm for standing up to destructive factions within her own party, especially on migration. If she doesn’t start leading in a different direction, the future looks bleaker for her and Britain after Brexit.

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