A Fool and Our Money

Two arguments have been made against the Government’s struggle to accomplish a satisfactory Brexit deal. First is that the effort has been run by a fool and second that any deal will make Britain poorer than it would have been had it remained in the Single Market and the Customs Union, or indeed the whole acquis of the European Union. A fool and our money will therefore soon be parted from us.

Boris Johnson has routinely been called an idiot by his opponents but has he proved himself to be a Shakespearean fool? Is he a jester who makes jokes but has a better insight than most of the cast, or simply a bumbling idiot – a Feste or a Bottom? Has he got Brexit done on manageable terms that protect our economy and will the country, Parliament and his party accept the compromises he has made?

He hasn’t been totally steadfast, he eventually voted for May’s dreadful deal at its final reading rather than accept not leaving the EU at all. That perhaps would have made Britain poorer by removing the freedom to deviate from rules that restrict freedom to innovate in regulation, taxation, etc. without the power to influence or veto unfavourable developments decided in Brussels.

The Centre for Economics and Business Research (CEBR) has forecast that the EU’s share of the world’s economy will have halved over the 30 years to 2035; that the UK will grow faster than France, with the gap between their economies increasing from 9% to 23%; that the UK will remain the 5th largest economy until overtaken by India around 2025, from which it has just regained this place (1). The UK’s technology sector and creative industries are fairly Brexit-proof in any case, although the financial sector has largely been left out of the deal.

The CEBR gave a fairly accurate prediction of the effect of the pandemic on the world’s economy but a short extrapolation from a known position is more reliable than, for example, assuming that Macron wins another 7 years as French president or that his successor doesn’t make major changes. Like other forecasters, these experts know the theory and history of economics, but not the future.

We expect grudging opponents to continue mocking the Prime Minister’s agreement, and him personally. Starmer calls it a “thin deal” – all 1236 pages of it, covering many fields – but will whip his party to vote it through Parliament. Sturgeon says it’s “a disaster for Scotland”, though it is probably less risky than her plan for Scotland to leave the union with England – a currency union with far greater trade intimacy.

We don’t know the Bottom line for sure. There will be lots of scrutiny of the text but as the Prime Minister says, “Freedom is what you make of it” and we don’t yet know what he will make of it.

(1) The CEBR study says, “We expect the trend rate of growth for the UK to be 4.0% annually from 2021-25 and 1.8% annually from 2026-30 and 1.8% annually from 2031-35” … “By 2035, UK GDP in dollars is forecast to be 40% more than that of France, its long-standing rival and neighbour”.



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