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tv   The Brexit Effect  BBC News  December 18, 2016 4:30pm-5:01pm GMT

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now on bbc news it's time for the brexit effect — the second in this series. hello and welcome to the brexit effect, with me, christian fraser. is the uk economy standing at the cliff edge — or is there a soft landing the other side of brexit? we will hear from business leaders in bristol on what type of relationship they want with the eu. i employ 50 plus people here. some of those are eu nationals. there is no clear visibility on what's going to happen to those guys post hard brexit, soft brexit, whatever brexit. they have been lean years for the pig farmers of yorkshire — migration from europe is at a record level. but what will end freedom of movement mean to the uk economy and how will it work in practice? we have an special panel with us this evening to debate the big issues. michael gove is here — the former tory cabinet minister one of the chief architects of the vote leave campaign. sir vince cable of the liberal democrats — former business secretary and a strong remain supporter. professor anand menon of king's college london — who leads the independent research
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body, uk in a changing europe. and dia chakravarty, political director of the taxpayers‘ alliance — a think tank for for lower taxes and smaller government. hello and welcome to the brexit effect — this is our special programme looking more in—depth at what lies ahead for the uk and the eu. we're now almost six months on from the brexit vote, still we have only a partial picture of where we are heading, and a great deal of uncertainty over who has the power to formally trigger article 50. yet for all these obstacles there's no question we are slowly moving towards the exit door. so far the economy has out—performed many of the forecasts
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made before the vote. but there are still longer—term concerns over what kind of deal will be negotiated, and, crucially, what will happen in those days after the divorce settlement takes effect. the cbi — that represents many big businesses — has been pushing for a gradual transition towards a new relationship with the eu. and a couple of weeks ago, the prime minister hinted that the government is working to avoid a so called "cliff edge". our business editor simon jack has been to the west of england to get the thoughts of company bosses there. britain is on a journey out of the european union. it officially sets sail at the end of march when we'll trigger article 50. so far the route we're going to take has been, well, a bit like today, pretty murky. so, we've come to bristol to find out what businesses here want to know about the potential perils and potential opportunities that lie ahead. for firms like this manufacturer of aerospace components, initial anxiety has given way to just getting on with it. in fact the company has just spent £a00,000 on this new machine. i was very pro—remain as a business person because i didn't want
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the uncertainty that brexit is still potentially going to create. but people have decided on what they want to happen. let's roll up our sleeves and move forward. in fact the economy has not really dimmed at all since the vote, and here at the uk's largest independent financial adviser, investor confidence has been looking up. and the other is that people have certainty that actually, the day after the brexit vote, the world hasn't fallen to pieces. but hang on a moment, remember, we are still in the european union, and there is a gap to be bridged between where we are now and life on the other side. the government wants to start the exit process by the end of march 2017. that means the uk will actually leave in march 2019. if no new deal between the uk and the eu has been thrashed out, what then? are we heading for the edge of a cliff? with precious little time to negotiate a new rule book, will we be stepping into a void? a regulation, customs and trade no man's land? mike summers is worried about potential delays at a new border with europe,
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and he's worried about the future of his european staff. i employ 50 plus people here. some of those are eu nationals. there is no clear visibility on what's going to happen to those guys post hard brexit, soft brexit, whatever brexit, whatever type of brexit we're talking about. all this talk of cliff edges has prompted ministers to start talking about a transitional period to give the uk a bit more breathing space as it leaves the eu. having a longer period to manage the adjustment between where we are now as full members of the european union and where we get to in the future as a result of the negotiations that we will be conducting, would be generally helpful. another thing that would be helpful is more assurance on the benefits of brexit. there are two schools of thought. one is that freed from europe, then we will be able to tear up all these regulations.
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when we look at it, the uk was always at the top of the list in terms of gold plating regulation that came out. so actually it could be that freed up from europe that's a green light to add more and more regulation. so we're not quite sure which way that's going to go. so what has emerged from the mist and the murk since the june referendum? there are fears that we won't get the deal done in time, we'll step into the unknown off this so—called cliff edge. but some ministers are coming round to the idea of some sort of transitional deal to smooth that process. and others are deeply sceptical about how much that might cost and how long that process might take. one thing businesses want is still the one thing they can't have: certainty. simonjack, bbc news, bristol. vince cable, if there's going to be a transition, how long should it go on for? i see this in two stages. and i think this is what philip hammond was arguing for. you have a first stage where the basic framework is agreed. you are in or out of the single market, you accept or don't accept the customs union, the formula for the settlement of britain's remaining debts
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on the budget, whatever. there is a lot of detail that will take years to sort out. let me take one single example. i did a conference with independent travel operators, now they operate undera regulation covering package holidays, and nobody imagines that this kind of detail can be renegotiated, it's taken 30 years to get there, within a small period of time. so there will have to be a framework in which the government agrees with the european union that we're going to stay in the single market either overall or for many product categories or we are going to leave it. and once that is established you can then begin to talk about all the technical detail which is massive. i take your point but if you have to negotiate a transition, why not get on with the real deal? why do we need a transition
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to get to deal we then have to negotiate again? if you don't do anything for two years and then you start, i can understand that's not helpful to anybody, and i don't think that's what philip hammond and others mean. you do engauge with negotiation, you get the framework agreed, and there is technical detail that will take a long time to negotiate. to take another example, all the stuff around the car industry, nissan, and whether or not they will be able to remain in the customs union so they don't have all the vast bureaucracy involved in rules of origin, orwidgets flying backwards and forwards. you can agree a framework, the car industry remains in the customs union, maybe, maybe not, i don't know. then when you've agreed it then you agree the mechanics of how it plays out. is there a cliff edge? no, i think the phrase was actually used by one of the leaders of the cbi and i think that it has been given a great deal of additional currency because people want to make the prospect of leaving seems somehow perilous instead
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of potentially liberating. i think it is the case, vince is right, that there are some issues that need to be resolved as part of completing the article 50 negotiations. we need to divvy up the resources of the european union and the debts between us. and there are issues, and vince mentions the regulations governing transport and travel. we can agree outside the european union and say that we will abide by them as we abide by other global rules and regulations that govern how commerce is done. i think some of the argument for transition runs counter to the need for certainty. and i think there are certainly some people who argue that a transition would provide a period of adjustment. the danger is that the longer the transition, the less certain you are about the final destination. michel barnier and guy verhofstad said that it would have
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to be for a fixed period, you couldn't have an open—ended transitional period. and in that sense the question is why not move quickly to concluding all of those things that constitute a proper deal, both the division of responsibility and its debts and comprehends a free trade agreement between britain and the european union which should work in both countries interests. if you then have a transitional arrangement between our current situation and what might be the eventual free trade agreement then how do we know that a transitional arrangement is going to take less time to negotiate than the final deal? it may well be that a transitional arrangement in all its complexity becomes a way of disposing activity from getting to the eventual deal we need to have. you raise the issue of cost. as a representative for the taxpayers alliance. the 0br says it will cost as an extra £250 million a week probably to transition. there is no specification over whether we would pay in for transition but that seems to be the cost. this is the thing, without knowing what this transition means, what it involves, how long the period lasts, how can
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we possibly have any sort of cost estimate to go ahead with it? it is definitely a point that whether this is actually going to be cope with, i don't think it is the right way to go, that is always going to be a worry. you talk about cost and also limited resources, it could be costs but it could be other things like civil service time etc, again at a cost. is it not worth focusing all of those resources and focusing on getting out, as it were, and going towards the final deal rather than dividing focus and working on something for a little while and then something else? that, i think, will be crucial and that's what we need to look at. but if we get to the period at the end of article 50, october 2018 on current projections, and there is no deal on the table, no transition, what happens to all those products that we export to the european union? it will be march 2019 i think when it ends. if we don't have a deal
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the wto rules will apply. and what is wrong with that? a certain amount of tariffs are mandated. but we would be quids in, as we have a deficit with europe. it would still impede trade because people would have to pay to trade goods either way. the more important thing is that you lose the certainty of the market and the equivalence of regulation that allows service providers to trade in lisbon like they were trading in liverpool. this isn't actually about tariffs, this is about regulatory equivalence. this is about saying, we accept your laws, you can come and do business here, and that is true for the city in particular. we are in the regulatory framework, we set the gold—plated standard on regulation. so we may choose to proceed with an option where we keep the regulation that
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has been negotiated. effectively we grandfathered single market rules. if that happens, the disruption is limited. i don't think we can be cavalier about the imposition of tariffs. industries, car industry, aerospace industry, pharmaceuticals to some extent, these are industries where vast amounts of stuff goes backwards and forwards across frontiers. it would have a crippling effect if you had to have customs control, tariff imposition or tariff relief every time one of those transactions happen. simply saying wto rules, tariffs, so what, that may not affect substantial chunks of the economy but for supply chain industries it's crippling. there are good reasons to think that the chancellor will prevent, —— prevail. it's being written up that he has the upper hand on his brexit colleagues in the cabinet. it's always dangerous to try to read too much into a comment here and a phrase there when you have collective
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cabinet discussion going on. both vince and i served in the same cabinet, we know sometimes certain comments are overinterpreted. sometimes there was a perception of division when in fact people were in the same place. i think philip's comments about the advantages of transition were in some cases overinterpreted because there are different types of transition, not too complicated this further. types of transition, not to complicate this further. we could be in a situation where we acknowledge that we have to continue paying into european union cofferss for a period after we've left in order to settle certain debts and seal certain obligations. are you relaxed about transition? at this stage i would want to know more before i could feel confident that a transitional period is the right thing. iam open—minded. i think it may well be the case that the period between the end
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of the article 50 negotiations, march 2019, and the period where we are fully outside may involve certain changes or alterations in the nature of britain's relationship with the european union. but until you've seen what is proposed, it's difficult to know. the thing i always say is, if we are going to have a transition, and during that period, unless it's perfectly clear what the terms and length, that can generate uncertainty. let's turn to one of the key issues with brexit you could say the issue — and that is migration. people in the uk voted leave for many reasons, but controlling immigration was one of the big messages on the doorstep. so if we end freedom of movement, how much impact could that have
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and what rules might replace it? chris morris has been taking a look. free movement is linked to membership of the eu's single market. here it is, the 28 eu countries plus iceland, norway, switzerland and the invisible dot in the middle, liechtenstein. the free market is more than a free trade agreement. a basic deal moves taxes, tariffs and quotas on goods and services from one country to another. the single market takes that from a starting point but it has a common set of regulations on everything from chemicals to working hours, a mutual recognition of standards on things like safety and packaging. it guarantees the eu's cherished four freedoms, the free movement of goods, services, capital and people and on that, says the eu, there can be no compromise. the single market and its four freedoms, fourfreedoms, are indivisible. cherry—picking is not an option. in other words, if you want free movement of goods, you've got to accept free movement of people. now you can make an economic argument for saying that full free movement of people isn't strictly necessary for the functioning of a single market. but this is about politics too. if the uk won unilateral restrictions on the free movement of people, who knows what other countries mite begin to demand.
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—— of people, who knows what other countries might begin to demand. the eu seems pretty determined not to give the uk anything which looks like a better deal than the rest. so it's tricky and there will be a price to pay. but if there's one lesson the government has to take from the referendum, it's that immigration numbers from the eu has to be seen to be coming down. that would seem to mean that free movement has to go. what are the numbers we're talking about? well, in the year tojune 2016, according to the office for national statistics, an estimated 285,000 citizens from other eu countries immigrated to the uk. while about 95,000 emigrated abroad. so a net migration figure of about 190,000, that's record levels. but look at how that breaks down. for a1% of new arrivals, the main reason for coming was a definitejob. but for another 31%, well, they were looking for work, with no guarantee of a job and that may be one area where the government could decide to tighten
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the rules quite considerably. i think the government's likely to adopt a work permit system. we have no wish to stop tourists and students and people coming in to invest their own money or people who can take care of their own livelihoods, but what we do want to do is to have a numerical control on the number of people who come in to take low paid jobs in our economy when there are still unemployed british people. there would need to be some kind of control. the easiest way to do that would be a work permit system. we have a work permit system for the rest of the world, it would be creating justice between europe and the rest of the world. to compare with immigration from outside the eu. new arrivals last year, nearly half of them came to study. they were students. that is obviously a different thing and they're not from the single market. but if the uk does impose
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restrictions on people coming from the eu, how might the eu respond to brits hoping to go in the opposite direction? and what other restrictions might be imposed? there are a host of other questions. do you make a distinction between high—skilled and low—skilled job seekers? what about sectors of the economy like agricultural and construction, that depend heavily on labour from elsewhere in the eu? how do you regulate any system in the first place? the home secretary, amber rudd, told parliament last week there would be a need to have some sort of documentation for eu nationals in the uk post brexit, so notjust work permits. it would be complex. 0ne estimate to leave you with, simply registering eu nationals already here for permanent residence would take, at the current rate it's being done, 140 years. an awful lot for the government to chew on. it needs to come up with some answers fairly quickly. if we pick up on one point in his report there,
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31% come here looking for work. if you wipe out those who don't have a fixed job, you deal with the number quite drastically. i suppose one does, though wipe out sounds drastic. if it was up to me, as soon as it was possible after the referendum result became understood and known, i would have said that anybody who has, who was in this country on the 23 june should be allowed to be here. that should have been the case, i think. the government didn't make that announcement. now it's a bit late to deal with those questions because a lot of other questions are coming in the horizon as well. it's a terrible idea for politicians to decide on a number when it comes to immigration. politicians are not good at working out how many people we need from anywhere in the world. it should be left to the businesses. the idea that you might have to have a job lined up
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if you come into the country, could be a good idea, students also. so when you have a real purpose to come into the country, that could work out. we should look into it. people like us, who have family or grew up outside the eu, that's how a lot of the world actually move around. i think that's something to look into. how do you determine who was here injune? there is a massive administrative problem there. the reason why the government couldn't do that, even if it was minded to, is they don't know who's in the country at any given time. unless eu migrants have registered to vote or are claiming benefits, we don't know who they are. couldn't we use the national card system? it's not a reliable guide as to who is in the country. when it comes to the numbers, this is as much as politics as the economy now. one of the clear things about the brexit vote was dissatisfaction about perceived levels of migration. i think our politicians know that.
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do you accept that? yes. you accept that migration has to come down? i accept that this is inevitable. you weren't very clear on that before the vote. i always argued that the fact that you have totally uncontrolled migration for the european union is difficult tojustify. it's leading - i don't understand the liberal democrat position. you are saying we can somehow remain in the single market while at the same time bringing down migration. during the discussion you made a very sensible point, when we talk about free movement of labour, there are different categories of people. i rather agree that it would be sensible to restrict people coming on a purely opportunistic basis looking forjobs. it's not clear that breaches the single market. if people are offered jobs here and are free to come when they've got bona fide employment, that is observing the spirit of free movement. this whole argument has been polarised between ridiculous extremes. i spent five years negotiating with the germans about free movement of professionals as part
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of the single market. they restrict movements of professionals. we don't apply the rules as we should? we've got a pretty liberal approach to it. given that the government is now in a very awkward position, that i think genuinely, they want to preserve freedom of trade and keep the single market as far as trade's concerned, but restrict movement. we should be looking for that kind of way forward. i don't understand what the problem is. there are two specific political problems about migration. we have a non—contributory welfare system. secondly, we pay benefits to people in work, working tax credits. which meant these people could come over here and claim from the state, even if they hadn't contributed before hand. there was a perception that this isn't fair. but that was something that came from the peculiarity of our welfare system. that made us slightly different to other member states.
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david cameron negotiated improvements in that. which we rejected. what happened to the australian points system ? well, it was dismissed, that's the wrong word, rejected by theresa may. i argued that we should have an australian style points system. you still believe that? it doesn't matter whether it's australian, what i think we need to have is a system similar to that, whereby we say that we're willing to accept people if they've got skills and if they've got the capacity to contribute to economic growth. we're also willing to accept a number of people who are fleeing persecution and to whom we should provide refuge. as it happens, i would go further than the government is willing to at the moment and i would do things the government has ruled out. one, i would guarantee every eu citizen here the right to stay. who, because you don't know who's here? if we provide that guarantee, then we'll find that actually — so we have an amnesty, everybody gets a passport?
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if you're an eu citizen, you're allowed. they will rush to the door. if it's the case we are about to go over the cliff edge, i don't think they will. it will be an interesting question as to whether or not european citizens think we're a good bet or not. the second thing is, i would, to be fair to vince, i think he has argued for that, i would exempt students from net migration figures. i would also be more flexible — that's ao—odd % of the number. it's making a complete nonsense, producing complete self— harm. we've heard this week they're going to halve the numbers. it's got nothing to do with immigration. they're not immigrants. for technical reasons they're included in the numbers. that's about enforcement as well. if you are here on a student visa, it shouldn't be that difficult if the uk border agency worked properly to work out once the visa, once that course is over, if they don't have a job to stay
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back with they don't stay back. that shouldn't be such a difficult thing to do. the public, of course, people were concerned about migration, it was an issue during the debate. i think the public are savvier than often given credit for. if people have a properjob and they're not undercutting wages, they're welcome. if people come to study, they're welcome. if people come to either gain the benefits system or come here with the explicit aim of taking advantage a demand for low—cost labour which undercuts the wages of people here, that's not acceptable. many people would ask what's the problem with the work visa system? you said your family came from outside europe. they're still over there. it'sjust me. anybody from outside europe needs a visa. that's why you don't need to go to australia! i guess, if we made some restrictions on people who were — we get rid of the 31% looking for work and say if you've got a work visa you can come. well, i guess that's the way
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the system could work. yes, i think one of the points john redwood made, which is fair, if there's seen to be equivalence between the european union and other countries that would be an entirely non—discriminatory policy when it comes to nationhood. that would be a good thing. now, it may well be that we end up having a deal whereby we give preferential treatment to certain types of people from the european union, that's a request that the eu makes. but as a starting point, i would far rather than we had a totally non—discriminatory system. no doubt plenty more twists and turns to come, but that is where we must leave it for now. thanks to all my guests this evening: sir vince cable, anand menon, dia chakravarty and michael gove. we will be back in the new year keeping track of the brexit effect. for now, from us all, thanks for watching. goodbye. a mild day across parts of
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north—east scotland. not as mild as advertised but this was one view from aberdeenshire this afternoon. a different story if you have been under grey #klir0ud, misty, murky conditions and this was the view in neath. dense fog patches expected to redevelop this evening through parts of england and wales. —— cloud, misty. this is the area we are most concerned about having a potential impact on travel tomorrow morning. rain heading into the far north—west of scotland. we may see a touch of frost in the coldest spots, clear, for any time overnight. but for most, it is fog we are looking at in the morning. the midlands and southern england where we are most likely, if we are going to have any problems, to find those. keep in touch with the bbc local radio
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station in the morning to check out the situation with you, before you venture out. you are looking at that, it is another grey, misty, murky start across a large part of england and wales and temperatures actually pretty much where they have been for much of the weekend. around five, six, seven at this stage. for northern ireland and for scotland a weather system moving through, picking up thicker cloud a spot of rain in northern ireland and outbreaks of rain in areas of scotland. during monday that will go south—east. the rain not amounting to much. if you are lucky you may get into brighter skies with the odd shower following before the sun goes down. england and wales, mainly cloudy. there will be a few brighter brea ks cloudy. there will be a few brighter breaks here and there but the chance of seeing patchy rain feeding in through parts of eastern and south—east england as the day goes on and most places will be in single figures, around 5—9. looking into monday evening, notice the clear he is skies, scotland and northern ireland that. means temperatures dropping lower, giving a frost for some going into tuesday morning.
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tuesday looks like a band of patchy rain through wales, western england, brighter skies to the east, a more substantial weather system from the atla ntic substantial weather system from the atlantic heading in to northern ireland and scotland. this is a sign of things to come, late tuesday that spills south—eastwards into wednesday. it does weaken as it does so wednesday. it does weaken as it does so but it is opening the door to more isobars, stronger winds and other weather fronths coming in from mid—week, bringing spells of rain and with the isobars close together, strong winds, too. high pressure close by at the start of the week, it is different from mid—week with low pressure in control. looks like that weather will last into the christmas weekend as well. our latest weather for the week ahead is available to watch at our website. is, iam is, i am annita mcveigh, the headlines at opium. insua, the
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evacuation of eastern aleppo starts again but not for the city —— the headlines at 5pm. trade secretary liam fox is the uk could remain a member of the you're customs union after brexit. heard of another strike by southern rail conductors tomorrow, the rmt leader mick cash denies accusations his union is using the dispute to take on the government.

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