When the Brexit bubble bursts, who will the Leave campaigners blame? The signs for the British economy are looking gloomy and it’s nothing to do with the normal economic cycle. The fall in the value of the pound by 15 per cent can be traced directly to the Brexit vote. The quarterly review by the CBI shows the fastest fall in business optimism since January 2009 with just eight per cent of firms being hopeful and 53 per cent gloomy. The poll of 472 companies revealed plans for fresh investment had stalled. Ford UK is reported to have lost £200 million since Brexit amid speculation that it could be the first motor manufacturer to up sticks and leave the UK. The closure of its two engine plants would cause thousands of job losses. Nissan has announced a freeze on investment. The manufacturing, financial services and construction sectors have all seen economic activity decline. While no one is yet predicting a sudden economic plunge, all the signs are pointing to a slowdown and recession, which will have profound implications for the country, as lower growth will impact treasury forecasts. The new Chancellor of the Exchequer has already announced a reset for the economy, the likelihood being action to stimulate economic activity to stave off recession for as long as possible during the continuing period of Brexit uncertainty. So, the targets of Cameron and Osborne to balance the books, will be kicked into the long grass and the Government will shore up the economy with more debt, undoing all the hard work of the last six years of austerity. Meanwhile, the Bank of England is likely to reduce interest rates in another sign that the economy is reeling from economic flux. The political situation continues to look uncertain, despite Theresa May’s appointment of David Davis as Brexit Secretary and Liam Fox as International Trade secretary. Neither has yet made a mark or signalled the direction Brexit will take. It seems that the real business of negotiation is much more complicated than it seemed during the referendum campaign, when slogans were cheap and deception and wishful thinking the order of the day. The Brexit triumvirate of Davis, Fox and Boris Johnson have parked their discredited referendum battle bus and it is now time for them to deliver on their promises of greater prosperity for the UK. They will be judged on their success. Let’s hope, impossible though it might seem, that they can somehow negotiate a path to the nirvana they so recklessly promised the British people. However, when the Brexit bubble bursts – as seems most likely – they will have no where to hide and have no one to blame but themselves.
At last a glimmer of sense amid the turmoil overwhelming the Conservative Party. Andrea Leadsom’s withdrawal from the race to become Prime Minister leaves an open field for Theresa May to begin building a new Government to confront the huge self-inflicted problems stalking the British economy. The Brexit intray for the new Prime Minister is daunting, with no guarantees of success. Whatever the strategy Mrs May adopts and whatever the improbable promises made by those politicians who argued for Brexit, everything hinges on a lengthy negotiation with the EU on the divorce terms. During this period of uncertainty, the UK economy will more likely than not fall into recession, with Mark Carney doing his level best at the Bank of England to mitigate matters with quantitive easing and interest rate cuts. A new Chancellor of the Exchequer will undoubtedly also take measures in an attempt to head off a downturn. Mrs May has stated that Brexit means Brexit and that she is determined to make the best of it. To succeed, Mrs May needs to maintain freedom to trade within the EU while curtailing the free movement of people. This puts her at loggerheads with European leaders who have so far stuck to the script that access to the single market depends on acceptance of the four freedoms of movement in goods, services, capital and people. So the battle lines have been drawn. The Remain campaign based its pessimistic economic arguments on the basis that the EU would not compromise on these principles. The Leave campaign based its optimistic economic arguments on the basis that the EU, at the end of the day, would put selfish interest first and act pragmatically to retain Britain – a big importer of EU goods – as a functioning member of the free market. There are a million and one other things for negotiators to consider but the crux of the divorce settlement rests on the questions of free trade and the free movement of people. The stakes are high. Failure to achieve access to the single market poses an existential threat to the City of London as the financial capital of Europe. Economic modelling by the OECD and the IMF already demonstrates that alternative options for the UK economy will result in poorer economic returns. For the real economy, this means less investment and fewer jobs at best, while a severe economic downturn could lead to job losses and a lengthy depression. Both Remain and Leave voters must now hope that Theresa May can succeed. In the meantime, a poll of Leave voters has revealed that about two million people now regret their decision to support Brexit. If economic uncertainty does turn into economic pain, as many predict, the fickleness of the electorate and the exigencies of Government might yet dictate that our leaders have to compromise on the core Brexit immigration promise, or tempt the wrath of history by jumping well and truly into the economic abyss.
The Conservative Party, supposedly the party of sound finance and government, has succeeded in creating the greatest economic and political crisis since the war. First David Cameron put party before country in calling a referendum on the UK’s membership of the EU, caving in to pressure from UKIP and right wing Tory reactionaries. Next, half the Conservative Party elite and a majority of Conservative Party members joined the Leave campaign, associating themselves with racist and xenophobic propaganda in a shameful and deceitful pitch to the British public. They did this in the full knowledge of the economic crisis a Leave vote would cause and the constitutional repercussions it would generate. And so it came to pass, Brexet gained 52 per cent of the vote. The UK’s economy is now on a downwards slope with growth forecasts slashed. The pound has plummeted in value and within 24 hours of the vote, the UK slipped from world’s fifth largest economy to sixth. The Governor of the Bank of England, Canadian Mark Carney, has admitted that the economic fallout he predicted has begun to crystallise. David Cameron again put party before country in resigning as Prime Minister and washing his hands of the calamity he was the prime mover in creating. Next, the Tory Leave grandees fell upon one another in a night of the long knives, causing Boris Johnson to walk away from the mess he plunged the country into. And finally, the rump of the Leave Tory bandwagon fell in behind a Prime Ministerial candidate, Andrea Leadsom, who is patently not up to the job. First, like some United States Tea Party crank, she plays the Bible card, next she refuses to publish her tax returns, then she publishes a City CV that no one can corroborate. Then, for good measure, she tries to make capital from the fact that she is a mother to three children, whereas her opponent in the Tory Party race to be Prime Minister, Theresa May, has no children. Now, just when the nation has voted in a referendum in a poll hailed as a triumph for democracy, we await for a small group of retired right wing Daily Mail readers – about 140,000 in number – to choose our next Prime Minister. You couldn’t make it up, could you?
After one of the most racist, xenophobic and deceitful political campaigns in living memory, the Leave momentum seems to be stuttering, as the consequences of the Brexit folly begin to hit home and the lies of the Brexiteers are sinking in. The billions promised for the NHS suddenly evaporated, question marks and splits over EU immigration, Machiavellian goings on with political plots and back stabbings among the Leave elite. A poll of voters who voted Leave has revealed that up to two million people wish they had voted to Remain. It’s the economy, stupid. As the pound hits a 32 year low against the dollar, holidaymakers flying out of regional airports are finding their spending money seriously curtailed, the boss of John Lewis warns of price increases, the Governor of the Bank Of England announces that the impact of Brexit is beginning to crystalise. Storm clouds are gathering over the City of London, the beating heart of the British economy, as banks look to save havens within the EU. Investment houses are suspending their property portfolios to prevent panic withdrawals, construction companies are being hit hard on the stock market, as confidence in the housing sector crumbles. Most of this is taking place at the macro level, but the impact of Brexit will soon begin to seep through to the real economy, fuel prices are set to rise as oil and most commodities are traded in dollars. Imported food goods will be more expensive. There will be some respite for UK exporters as their products become more competitive but the UK imports much more than it exports. Meanwhile, our politicians fiddle while the economy burns. The Conservative Party, the very organisation that created this crisis, grapples with its own divisions. The Labour Party meanders towards full scale meltdown, a split cannot be ruled out as the seismic implications of Brexit reveal new sides in the political equations. The only certainty for the time being is more uncertainty, with all the political and economic consequences this will entail. As usual those at the bottom of society will suffer the most.
Boris Johnson pulls out of the Tory leadership race. So, the one thing he wanted, the keys to No10, slip through his fingers. The one thing he didn’t want, Brexit, will be etched on his tombstone. His u-turn on free movement of people in Europe, articulated in his weekly column in the Daily Telegraph, lost him the support of true Leave campaigners, including Michael Gove. Having already lost the support of mainstream Tories, it left him with insufficient support to win the leadership. So, having played a leading role in causing chaos to the political system and meltdown in the UK economy, he walks away with a skip and a smirk. Michael Heseltine accused him of causing the greatest constitutional crisis since the war. Of leading the troops up the hill and then abandoning them in the heat of battle. Others accuse him of playing an upper class student game without principle and with a cavalier attitude to the ordinary working people who will suffer most from an economic downturn. The Guardian went as far as calling him a sociopath, without a thought for anyone but himself. It now seems that the soft landing of an amicable divorce from the EU is in the balance. The mood music from all the Tory leadership candidates is that the question of free movement of people must be confronted, while the EU is adamant that there cannot be free trade without free movement. This leaves considerable uncertainty, which will impact on economic growth, which will feed into the real economy, investment and jobs. Any threat to London as the financial capital of Europe would surely shake politicians from their stupor as it would threaten the entire financial outlook of the UK. Right now we face years of uncertainty. If free trade with Europe is not agreed, we will surely see a jobs exodus to the safe haven of the EU. Already the Bank of England is looking at an interest rate cut to shore up the economy. But with the interest rate already at an all time low of a half per cent, monetary action is limited. Printing more money, quantitive easing, with all the risks this raises in a weak economy is also a possibility. One thing is certain, we face a bumpy road, with job losses, falling investment, higher prices in the shops, inflation, weak consumer spending, higher taxes and more austerity. Brexit campaigners laughed at the prospects of economic fallout but the truth is project fear has become project fact.
Boris Johnson emerges out of his weekend hiding to write in the Daily Telegraph that the free movement of people in Europe will continue and that the UK will remain in the single market. And that Britain will re-intensify its co-operation with Europe. In case you have forgotten, this is the same Boris Johnson who has campaigned for three months against the free movement of people. The same Boris Johnson who has campaigned against paying a membership fee to the EU, a membership fee which he said should be spent on the NHS instead. If you want to be in the single market, you have to pay a fee and you have to accept the free movement of people, so if you are one of those who backed Mr Johnson because of immigration and because of his NHS pledge, you may be wondering what the referendum was all about. We now face the prospect, if Mr Johnson can be believed, of being a non-member of the EU but continuing to pay into the EU budget and continuing to accept the free movement of people (unless he knows something that the rest of the world doesn’t). However we will have no power of veto on new members to the community or any say on how the EU is run. Remember the Leave campaign hysteria over the prospect of Turkey joining? For those who supported Remain, the picture Mr Johnson appears to be painting provides the softest of landings for the UK economy. It is what is called the Norway option. Norway is not a member of the EU but has full access to the single market on condition that it pays into the EU budget and accepts free market rules, including the free movement of people. If you are thinking that nothing has changed, think again. The pound is currently in free fall, the UK credit worthiness has been downgraded, the Government is in a state of paralysis, there is no effective Opposition, £120 billion has been wiped out on the stock exchange, racism is rife on the streets of Britain thanks to the shameful xenophobic Leave campaign, Scotland is planning to exit the United Kingdom, the Northern Ireland peace process is threatened, the growth forecast for 2017 has been slashed from plus 1.8 per cent to minus 1.0 per cent, business investment has stalled, Government borrowing is set to rise which means taxes will go up and public spending will come down, and the UK still faces months if not years of recession. One other thing has changed too, the Prime Minister has resigned and Boris Johnson is the favourite to succeed him. Is everything beginning to come into focus now?
Racist flyers posted in homes of East Europeans in Cambridgeshire, Welsh Muslim told to ‘pack bags and go home’, men chanting ‘out, out, out’ at Muslim in Brockley, ‘repatriation now’ rally in Newcastle, Portuguese family say they are frightened in Peterborough. The pound in free fall, two trillion wiped off investments across the globe, credit ratings agencies downgrade the UK, Scotland announces second independence referendum, calls for Ireland reunification amid fears for peace process. Leave campaign lies on NHS funding and immigration laid bare. Government in paralysis. Boris Johnson and Michael Gove in hiding as project fear turns into project reality. Welcome to Brexit Britain.