All’s Well That Ends Well*
But how well will Brexit end? Freed from the EU’s stranglehold the UK could do very well but many with influence or political power will want to see their doleful warnings proven correct and could well prevent the measures needed from being implemented. This might even result in a General Election.
If Labour were to lead a post-Brexit government its current program of nationalisation, redistribution and taxation would not fit the circumstances. Our purpose here is not to judge the relative merits of socialism against other political philosophies but the components of Labour’s programme would have to be funded by wealth created and retained in Britain since they would not attract the wealth of foreigners after the shock of separation from the EU and would likely see the disappearance of native funds. Regenerative investment would have to be funded mostly by the state, which would require digging deep into many peoples’ pockets. We doubt our bootstraps are strong enough to pull our country up to a level that would excite participation from the global economy, which is necessary to thrive in today’s world. (See Leave’s Labour’s Lost, though the party is even more confused, and confusing, now than it was last September.)
* All’s Well That Ends Well is one of Shakespeare’s less popular plays in which the heroine, Helena, has an inexplicable, inextinguishable passion for an unworthy subject, Bertram, who treats her badly and has a preference for other partners. We’re tempted by the parallels but Helena’s doggedness wins Bertram’s affections in the end; it’s an unlikely consummation if we substitute the Bard’s characters for UK Remainers (Helena) and the EU (Bertram).
A Treasury of Failed Forecasts
Hammond says ‘no deal’ will cost the UK £90 billion, presumably basing this forecast on the same Treasury model that gave his predecessor, George Osborne, the opportunity to tell us before the Referendum that voting to leave the EU would cause “an immediate and profound economic shock” – it didn’t. He also said it would be costing each family £4,300 by 2030—a whopper bigger than Boris’s £350 million. (Just to begin with he divided the supposed loss of GDP by the number of UK households, but the total of incomes is far from the total GDP; he also used a model that the Treasury refused to publish so its assumptions could be checked; and, as we have argued many times, economic forecasts 15 years hence are notoriously unreliable.) GDP did not contract, unemployment reduced (to a 43-year low). If the economy is starting to suffer it is because nobody knows what’s happening so they are hedging their bets (aka their investments) until the mist clears; plus of course the world economy is slowing, not least the EU’s portion.
Ninety percent of Britain’s economy occurs without trading goods with the EU and we already know that trade won’t stop dead because deals have been agreed to keep planes flying and trucks moving. Outside the Customs Union many prices, particularly those most affecting the poorest, like food and clothing, can and should fall.
The kind of deal that Hammond and his ‘fellow travellers’ will accept would prevent the UK setting up Enterprise Zones and Free Ports because the EU will insist on ‘level playing field’ arrangements (see A level playing field?). Enterprise zones have allowed the US to revitalise rust-belt towns and are exactly what many in the north and west of Britain need to lift their fortunes—a deserved reward for their brave Referendum votes. If the UK leaves on DWA terms, with or without the Irish Backstop, or any deal that the EU is likely to agree before 31st October 2019, William Hague thinks there’s no chance of the current Parliament passing legislation to enable any of the radical programs necessary to take good advantage of Brexit and that a General Election will be the unavoidable result of no deal. With Labour, Liberal Democrats, Conservative and Brexit parties all at similar standings in the polls, could a radical coalition be formed to implement what is needed to transform the country’s fortunes? There is fair chance of further drift and decline.
This is not a good reason for cancelling Brexit. The EU continues its relative decline and is facing challenges it is incapable of overcoming without serious fracture and rearrangement that will cost members dearly, one day.
May, the force was not with you
On July 17th, just before leaving office as Prime Minister, Theresa May gave a speech about the current state of politics. She talked about the importance of compromise in a liberal democracy and in the abstract her proposition was fair enough. However, determined to justify her leadership on Brexit she complained that the pro and anti sides had been unwilling to compromise by accepting her (Draft) Withdrawal Agreement. In fact many of her staunchest opponents, like Jacob Rees-Mogg and Boris Johnson, compromised themselves out of desperation by voting for her Agreement on the third time it was put before Parliament. The EU stuck uncompromisingly by the mandate given to M. Barnier at the start. However, May compromised her red lines, repeated her declaration that “No deal is better than a bad deal” and her mantra that “Brexit means Brexit” (which of course is literally meaningless so cannot be judged). Worst of all she intended to compromise the sovereignty of Parliament, and so her country, by agreeing that a foreign government and its courts could overrule the UK’s, potentially indefinitely. (see A Withdrawal Agreement and linked posts)
Jobs For The Boys and Girls
George Osborne backing Boris sounds like a job application, but is he really going for IMF President? Amber Rudd now says she’ll tolerate no deal—does she want a Cabinet post under Johnson (she once said she wouldn’t like to share a taxi with him)? A big majority of Tory MPs converged on Boris as their choice for leader from the outset and throughout the stages of the selection process—do they want to keep their seats? Our fear is that Boris will seek to accommodate as many of these people as he can, it’s his natural inclination (he’s not a political headbanger, despite how he is being portrayed by his enemies—see Anyone for Boris?) but that could lead him down the path of compromise and failure to confront the Brexit problem, which is the EU’s intransigent leadership.