This grotesque blight

by Sean Rickard

The UK economy is in post Brexit mire and we sink deeper by the day.   This blog has long argued that while the trade effects of Brexit are doing severe damage, the longer-term impact on business investment is a greater calamity.   ONS data shows that business investment is now more than a third lower in real terms than might reasonably have been expected if its pre-2016 trend had recovered post Covid.   Business leaders, aware that ultimately, growth and living standards depend on business – and government – investment, are increasingly pointing to the UK’s dire investment performance.   It is however, lamentable that like our politicians very few business leaders are prepared to publicly admit that Brexit is the problem.   The critical first step, as all good managers know, in solving any problem is its recognition.  

Speaking in London last Friday, the Chancellor said we needed to be ‘straight about the economy’s weaknesses i.e., poor productivity and low business investment.   He also admitted that Britain had not returned to its pre-pandemic output levels and acknowledged that other industrial countries had grown faster.   Indeed. a poll of UK economists showed they think the UK will face one of the worst recessions and weakest recoveries in 2023.   Overlooking the fact that only three years ago the government rejected the idea of an industrial strategy, Mr Hunt said that recovery demands a focus on sectors such as digital technology, green products and life sciences.   Shorn of any practical details the speech notably failed to point out that the EU is ahead of us in the development of these sectors and that as members of the EU we had some notable successes in high tech sectors e.g., ARM.

More to the point, he did not admit the role of Brexit in Britain’s ‘weakness.’   Without a trace of irony, he had the gall to claim that the government could now deliver a growth strategy because of the freedoms afforded by Brexit.   The first freedom he identified was a looser policy towards state subsidies – despite his priority of reducing government spending – just five days after the EU not only announced a similar policy but backed it up with a €2 trillion fund in which as members we would have shared.   Mr Hunt’s second freedom – forgetting the lessons of the financial crash – is the ability to relax standards and regulations in the hope of encouraging (reckless?) risk taking and entrepreneurship.   No doubt Mr hunt is aware that the EU was an important source of funding and support for entrepreneurial activity and since the referendum there has been a decline in UK start-ups.   As with most Tory economy policy, the claims made regarding the benefits of less regulation lack credible evidence.   Recent literature suggests regulations may be good for the economy; they reduce uncertainty, safeguards consumers, incentivises investors, and encourage new technologies.

Of course, evidence and facts have no place in the minds of the Brexit zealots and Mr Sunak clings to office by pandering to their vacuous demands.   Not content with the damage they have wrought to date, the zealots are now set to ply further costs and investment disincentives on business having forced the government to proceed with its Retained EU Law (Revocation and Reform) Bill.   Business leaders are near universal in their condemnation of the Bill.   Lacking any discernible policy thinking, it provides for the 4,000 or so bits of British law which derive from our membership of the EU to lapse automatically by the year end unless Ministers – not Parliament – decide to keep them, amend them or replace them.   Parliamentarians have pointed out that the timetable is procedurally absurd.   It is too short for proper risk assessment and scrutiny by Parliament – hardly what rational people understood by ‘taking back control.   The government has backed itself into a position where it can either summarily scrap a vast range of essential, even life-enhancing laws e.g., product safety, food standards or water purity, or simply copy-and-paste them, shorn of EU association, into new legislation – a monumental waste of parliamentary time.   Just like Brexit the slogan ‘remove EU laws’ is a mindless slogan and more likely to blow up in his government’s face delivering only costs and no noticeable benefits.

Mr Sunak promised to deliver competent government, but he must know that the Retained EU Law Bill is a costly nonsense.   In hoc to the zealots there is no chance that Mr Sunak and the English Nationalist party he leads are in any mood to come clean on the unfolding disaster of Brexit.   This, after all, would involve admitting that ideology and deceit trumped reason and honesty.   Such is the Tory party’s flight into irrational, nationalist nostalgia, it will take the ‘shock’ of a massive election defeat to end its delusions.   Brexit was only the last of a string of glaringly costly Tory policies since 2010 but it has proved the ‘last straw.’   Hopes that Mr Sunak’s ‘furlough boosted’ personal ratings might stave off defeat have evaporated as the party continues to lag far behind Labour in the polls with the prospect, as with its Canadian counterpart in 1993, of annihilation at the coming election.    

All the polling evidence suggests that the more UK households experience Brexit the less they like it.   The numbers who still believe it was ‘right’ to leave the EU are steadily declining; almost 60 per cent of Britons now say that Brexit has created more problems than it has solved, with a meagre 10 per cent claiming the reverse is true.   Voters are discovering that all Brexit has delivered is a state of dysfunctionality.   It has divided and injected acrimony and toxicity into the nation while dispensing widespread economic malaise.   I hope, that after the next election, senior politicians as well as business leaders who are currently cowered by the fear of accusations of betrayal by right-wing populists, will find their voices and explain why it is imperative that the grotesque blight of Brexit be reversed.