According to the OECD, of the 20 leading economies only Russia is performing worse than the UK. This accords with the OBR’s view that post Covid the UK has ‘missed out on much of the recovery in global trade’ and is now a less trade intensive economy. As regards investment, the life blood of economic growth, UK business investment is more than one-third below its pre-Brexit trend. These realities have convinced the leaders of industry i.e., the CBI and the TUC and the City, that any hope of restoring economic growth to its pre-Covid rate now depends on a much closer trading relationship with the EU which one should read as code for re-joining the EU. Senior government figures know this and, as reported by the Sunday Times and corroborated by the FT, are contemplating seeking a closer trading relationship with the EU, the only surprise is why it has taken so long for such musings to surface.
Predicably even the idea of attempting to reduce the cost of Brexit provoked a furious reaction from the zealots. Out of touch and out of ideas the zealots are akin to the Taliban – the plight of the UK population is of secondary importance to preserving the Brexit myth. Sadly, the hope that the zealots’ grip on the Party they are destroying might weaken with the reality of Brexit has proved premature. This is evidenced by Mr Sunak’s immediate denial of considering a closer relationship with the world’s largest trading bloc and his offering a bonfire of EU derived regulations despite widely expressed concerns by business leaders that forcing trading companies to comply with both EU and British standards would only create uncertainty and costs. Mr Sunak’s response to these concerns is to talk of Brexit opportunities which he should by now know have no real substance and that only a return to the single market offers the tangible prospect of significant trade and investment opportunities as well as ending the Northern Ireland protocol omnishambles.
Anyone doubting the paucity of opportunities outside the EU should listen to Mr Gove’s recent interview on the Today programme. Told that businesses could only see the costs of Brexit and asked to identify a benefit all he could mumble incoherently was that one set of payments to farmers was being replaced with, as yet to be finalised, another set. I doubt Mr Gove has spoken to any farmers recently who along with most business now realise they were sold a pup. Reality for both businesses and consumers is that in addition to the after-effects of Covid and high energy prices, they are struggling with the added burden of Brexit; namely, a weaker pound, trade sanctions with the world’s largest trading bloc and a government whose tax and spending options are now subject to the approval of financial markets.
Mr Sunak may feel unable to acknowledge this truth but voters are becoming more aware. A recent YouGov poll showed 56 per cent of people now think we were wrong to leave the EU and only 32 per cent that we were right. Only the over 65 nostalgias reveal a majority in favour of Brexit and thereby selective amnesia. Prior to joining the EU Britain was known as the ‘sick man of Europe’ and it is now clear that the economic and political chaos caused by Brexit has led foreign observers to conclude that Britain is reverting to its pre-EU status. Guy Hands a billionaire former Tory Party donor argues that if the Party does not move on from fighting its own internal wars and actually focus on what needs to be done the ‘economy is frankly doomed’.
What the country needs now is some honesty from its government and a rational dialogue on the best way out of the Brexit mess. Mr Sunak defends his ‘head in the sands’ approach as accepting the outcome of the Leave referendum. But this won’t wash. No one was ever asked to vote on a hard Brexit and many prominent leaders of the Leave campaign e.g., Daniel Hanahan, considered membership of the single market a suitable, post Brexit landing ground. Certainly, the Brexiters never discussed the consequences of labour shortages or the effects for Northern Ireland, and those who warned of the longer-term risk of reputational damage were ridiculed. Rather the zealots chose to interpret the marginal – and grossly ignorant – Brexit vote as a mandate to move aggressively towards a low-tax, minimal social welfare economy. It was to the whistle of this group of ideologues to which the Truss government was dancing when it crashed the economy, despite the fact that Britain had never knowingly voted for such extremism. Mr Sunak may once have subscribed to the fantasy of Singapore upon Thames, but he cannot now hold to this view and be of the rational mind expected of a Prime Minister. To paraphrase Michael Saunders, a former member of the Bank of England’s monetary policy committee, the crisis regarding tax rises and spending cuts is a direct result of Brexit and we can be pretty certain that this is the prevailing view within the Treasury.
The question therefore is how long is the government going to allow a minority of zealot MPs to subvert living standards? Deep down Mr Sunak must understand that the only hope of economic recovery – indeed his own political survival – urgently requires a closer relationship with the EU. His conundrum is how to move in this direction without the zealots accusing him of betraying Brexit. The nation’s misfortune is that Mr Starmer is in the same bind. His fear appears to be the belief that he cannot risk going into the next election being portrayed by the Tories as ignoring the ‘democratic’ Brexit vote. But his ‘make Brexit work’ mantra is tosh and his resistance to a full-frontal attack on the costs of Brexit is shameful. Voters, including those in the ‘red walls’ are disillusioned and crying out for honesty from their leaders.