Matthew Lynn

Why business and the City should speak out against a second referendum

Why business and the City should speak out against a second referendum
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Parliament is deadlocked. The cabinet is split down the middle and Brussels won’t compromise on the deal it has already offered to the Prime Minister. As the clock ticks steadily towards March 29th, there seems little way out of the impasse surrounding our tortured exit from the European Union. No one can agree on how to leave, or how to stay either. Against that backdrop, it is probably no great surprise that a second referendum is gaining momentum. It is at least a way out of the mess, and possibly a more decisive one than any of the alternatives.

Theresa May has spoken out against that today, even if many of her Cabinet ministers are staying strangely silent on the issue. As the debate intensifies over Christmas, business and the City should support her in that stance. Of course many will be tempted to support another vote, and a lot of leading industry and financial leaders have already done so. But, like the cleverly branded People’s Vote campaigners, that is largely because they hope we will end up voting to Remain if we re-run the whole process. But they should at least be honest enough to point out that it would be a disaster for their companies, and for the economy. Why? There are three reasons.

First, another vote will simply prolong the uncertainty. The last one took months to prepare, and although it might be a bit quicker this time around it would still be a long process. During that time, no one would have the foggiest what might happen. We might leave with no deal, take the one on offer, or quietly forget about the whole thing and go back to arguing about inheritance taxes or road pricing or whatever it was that used to get us worked up about before Brexit started. Business keeps saying it wants certainty. Well, leaving next March is certain. It might not be great, but at least everyone knows what is going to happen and can plan accordingly.

Next, it will simply encourage the EU to stick with the fairly terrible deal that is on offer right now. There is no incentive to compromise or slightly improve the terms – which with the Eurozone economy already turning down there might be – because a second referendum holds out the prospect we might decide to Remain. The net result? We come out worse from the negotiations, and it is the economy that will suffer the most from that.

Finally, the result is not likely to be any different. There is plenty of polling around Brexit, and a lot of it is all over the place, but there is very little serious evidence to suggest that many people have changed their mind since 2016. The Leavers still want out, and the Remainers want to stay. Re-running the vote is simply a waste of everyone’s time. Business is usually in favour of clarity and decisiveness, not endless prevarication. This issue shouldn’t be any different.

True, everyone in business and the City is dismayed by the chaos around our departure from the EU. And, on the whole, companies prefer to stay out of political arguments. But the leading members of the FTSE, the Bank of England and the CBI spoke out repeatedly in the first vote to encourage us to stay in. It would make a big difference if they did so again, but this time in support of the Prime Minister. Right now, businesses should be saying publicly that the decision has been made, and that best thing the UK can do for its economy now is simply to get on with it even if, as looks likely, that means no deal.