Friday, 1 October 2021

Denial deepens (Great) Britain's Brexit crisis

As the Brexit-related national crisis discussed in my previous post continues, including ongoing petrol shortages at garages, Brexiters are undecided as to what to make of it. Their boilerplate argument is that the crisis is nothing to do with Brexit, but something affecting countries around the globe including EU members, although this flies in the face of the evidence of how the single market gives logistics firms the flexibility to avoid shortages (£) and, hence, the lack of empty shelves and petrol queues.

Yet arch-Brexiter Allister Heath, Editor of the Sunday Telegraph, claims that “the Brexit-hating global elite is watching Britain’s chaos with glee” (£), which would hardly be possible if that chaos was not specific to Britain and related to Brexit, although Heath seems to be unclear whether it is or not. To be charitable, this contradiction might be explained by his claim that Britain is being “held to a higher standard” because of having had the temerity to defy global bureaucrats by becoming a self-governing country (sic). But, if so, that contradicts the longstanding Brexiter claim that such self-government is the global norm. Nor does it sit easily with all the breathless talk of ‘Global Britain’. But perhaps all this is to look for logic where none exists.

One way that, to the extent it is acknowledged by Brexiters at all, they explain the distinctively deep nature of Britain’s crisis is in terms of ‘panic buying’ as the cause, including the suggestion that it would not have occurred but for media reporting of minor shortages of petrol. Such is the diagnosis of ERG ‘Spartan’ MP Andrew Bridgen, based on the somewhat underwhelming evidence that it is what is said by “friends of mine” – a club to which it is hard to imagine a jostling queue for entry.

This doesn’t quite fit with the Brexiter stereotype of how stoical, unflappable Brits differ from their emotional and ungovernable continental neighbours, but it’s a truism that people won’t panic buy if they don’t know there is anything to panic about. However, it is ultimately absurd unless we want a media which does not report any shortages unless they are so widespread as to be calamitous, and also imagine that, especially in an age of social media, people won’t learn of them by word of mouth anyway.

In any case, it doesn’t tell anything like the whole story about why panic buying is happening in Brexit Britain.

Brexit-specific reasons for ‘panic buying’

Panic buying is well-known in many social sciences as a stock illustration of ‘the (collective) irrationality of (individual) rationality’, because for individuals hearing of actual or predicted shortages it is rational to buy, and yet the collective effect of them doing so is irrational in making the shortage worse or the prediction self-fulfilling. In that sense, this latest example is no different to many that have happened before. But it has two other features which are more or less related to Brexit, and therefore we can expect it, if not in relation to petrol then something else, to recur.

Brexit and trust

The first is that for several reasons, not all related to Brexit, public trust in what the government says is very low and so its messages of reassurance are likely to be ignored. Boris Johnson is perhaps a uniquely dishonest Prime Minister and, curiously, that is understood quite as much by those who support him – to some of whom it is actually part of his appeal – as those who do not. He sets the tone for a government which is cavalier with the truth and also more than usually addicted to performative symbols rather than substance and competence, and to campaigning rather than governing. That leadership and general tone are very much characteristic of Brexit and are some of the general threads that link the Vote Leave campaign to this Brexit government.

More specifically, this is a government explicitly constructed on the basis that Brexit, if even mentioned, must never be criticised. The refusal until this week of Transport Secretary Grant Shapps to even acknowledge that Brexit is a factor in the fuel crisis is all of a piece with this, as is the ongoing refusal of other ministers to do so. Even more so was the attempt through anonymous ministerial briefings to blame the situation on “diehard remainers”. Thus the public, the majority of whom had already made the connection with Brexit, might sensibly conclude that the government would be minded to suppress any bad news which was associated with it and to use it as an excuse for yet more culture warfare against remainers. This, of course, is just part of the wider Brexiter attempt, mentioned above, to deny the role of Brexit in the supply crisis in the face of numerous objective reports to the contrary in the international media, the denial as much as the crisis itself being what is making the UK a laughing stock abroad.

The reality of post-Brexit fears

The second feature is a deeper one. If people believe that, generally, supply chains are fragile and liable to fracture then they are right to do so. That has become much more so in recent decades with the rise of extended transnational supply chains and of the use of just-in-time management techniques throughout them. There are arguments, not just on nationalistic grounds but on those of security, sustainability and environmentalism against those developments. Nevertheless, they have occurred, and unwinding them would entail costs, both in the prices and the ready availability of a massive array of goods, including locally out-of-season or ungrowable produce.

For example, overall about half of the UK’s fresh fruit and vegetables are imported from the EU, with sharp seasonal variations so that, for example, 90% of lettuces consumed in the UK in January come from the EU. For most such produce (some fruits are an exception) almost all of what is imported comes from the EU where it is not domestically sourced – distance matters for trade in general, but especially so for perishable goods - and for the most part it arrives on refrigerated HGVs via roll-on, roll-off ferries. As such, it is highly vulnerable to any delays or difficulties in transportation, both of which have been made more likely by Brexit and will become even more so if ever the UK becomes ready to apply full import controls.

If changing this way of organizing the economy was what people had wanted to do, it would have been a massive undertaking, but it would not have needed Brexit. As with the case of rewards and conditions for HGV drivers, discussed by Sarah O’Connor in the Financial Times (£) this week, or of those for workers in general, we could – and many would say should – have done it anyway. Crucially, Brexit was never proposed as something which had this motivation or would have these effects. On the contrary, any suggestion it would do so, even to a much lesser extent than has in fact now happened, was shouted down as Project Fear.

So, with almost no discussion and very little time for preparation, Brexit dropped an enormous rock into what were already complex, fragile and highly calibrated mechanisms of domestic and international supply chains, making them even more fragile. Thus for this reason, too, the public are wise to be, as it were, on a hair-trigger to panic buy because if those supply chains collapse things that we have taken for granted for decades will fall apart, and things can get very nasty indeed. As we have seen this week, the consequences are not just a shortage of ‘avocados in Waitrose’, as prolier than thou Brexiters sneer, but can very quickly include funerals cancelled and old people left alone and soaking in urine because their carers can’t get the fuel to reach them.

Recurrent crises are likely

Given these things, we can expect the coming months, if not longer, to be characterised by intermittent recurrences of supply crises and panic buying, whether over particular goods or more generally. Even without that, we can expect continued price rises to the extent that the additional costs of trade created by Brexit are passed on from companies to consumers, as well as because of the rising cost of energy. Business groups are now warning of an ‘autumn storm’ of shortages and escalating costs (£).

The exact shape and extent of this is impossible to predict because what is going on is not so much an experiment – which would imply some deliberate and carefully managed process – but a blindfolded exploration of what happens to a country which is highly integrated into the international economy when it becomes less integrated, or integrated on different and largely unknown terms. Indeed, it is for that reason that currency markets are now treating sterling as if Britain were a developing country,

Apart from some of the more eccentric Brexiters, such as John Redwood, there is little appetite, and in any case no possibility, of the UK becoming a largely self-sufficient economy. So the most likely outcome is that richer people will be able to meet these rising costs and to preserve stockpiles against supply disruptions (the reason petrol is such a politically potent case is because stockpiling is very difficult). Going out to a restaurant, say, will become a bit more of a rare treat and a bit less of an everyday experience. People will have to get used to waiting for, say, new kitchen installations until the parts and labour are available. Some of these are ‘first world’ problems, perhaps, but the Brexiters never suggested that leaving the EU would mean ceasing to be such a country.

What about the workers?

As regards the labour shortages, there may well be wage increases though that is not yet clear, and if so rising prices may cancel them out. There is now an increasingly common expectation (£) that we will see the return of ‘stagflation’ – inflation with no economic growth. At all events, the government’s reaction to the HGV driver crisis shows what its approach to labour shortages is going to be. Obviously a few temporary work visas are going to have almost no effect, and whilst ‘deploying the army’ may give a certain sort of Brexiter moist feelings of excitement where none should be, it isn’t a sustainable solution either. More generally, the Home Office continues to refuse industry pleas to add the numerous occupations facing a recruitment crisis to the Shortage Occupation List, just as it did last year when all 70 of the occupations the Migration Advisory Committee recommended adding to the list were rejected.

Instead, the government (though not, perhaps, Johnson himself) continues to believe in the Brexiter shibboleth that domestic labour is sufficient for the economy’s needs, notwithstanding the fiasco of the now abandoned ‘Pick for Britain’ scheme and despite, as David Smith of The Times acutely explains, the absence of anything resembling a coherent labour and employment policy (£).

So, apart from simply ‘leaving it to the market’, there is likely to be a renewed push to make the unemployed – no matter for what reason, be it caring for relatives, precarious health or even irredeemable unemployability – work, and for people to work to a later age. Already we have seen suggestions that prisoners be used to work in the meat industry, and this week Justice Secretary Dominic Raab opined that they could undertake a range of jobs, including HGV driving. It can only be hoped that such novice truckers will be more skilled than the van driver who ran into the back of Nigel Farage whilst vainly searching for petrol this week.

It won’t be a pretty sight to see people, metaphorically speaking, flogged, into the fields but it is the logical corollary of the Brexiter belief, much on display in the fuel crisis, that the UK’s labour needs can and should be met by British workers.  It will be especially distressing for Lexiters to see where their naivety has led, but delightful for Tory Brexiters like Raab, Patel and Kwarteng who have long denounced the idleness of the British.

The latter doesn’t, by the way, mean that ‘this was always the plan’, as is so commonly and so tediously claimed on social media about each and every development in the Brexit saga. Anyone who still thinks there was ever ‘a’ plan for Brexit really hasn’t been paying attention over the last few years, or credits the bumbling, incoherent public face of Brexit – the Helmers and the Habibs, the Redwoods and the Rees-Moggs, the Bridgens and the Bones – with a hidden competence that flatters them considerably beyond what objective reason, or even the most generous charity, suggests is warranted.

The Northern Ireland difference

There is a very bizarre contrast between the government’s approach to Brexit in general and to the Northern Ireland Protocol (NIP) in particular. The general approach is to insist that Brexit is having no adverse effects, despite the supply crisis, and that nothing about it is up for discussion, still less change. Yet the NIP, which is in many respects protecting Northern Ireland from Brexit problems, including that of fuel shortages, is treated as an unworkable disaster which must be completely renegotiated. Relatedly, whilst playing down or rejecting any suggestions that the new Brexit barriers are impinging on EU-GB trade, those same barriers are represented as devastating for NI-GB trade.

If there is a sense to be made of it, it may lie in the lingering unionism of the Tory Party and within that guilt about Johnson’s abandonment of Northern Ireland’s unionists in order to ‘get Brexit done’ and perhaps even fear that it will augment the boost to Scottish independence that Brexit has in any case provided. Be that as it may, what has been created by Johnson’s Brexit is something akin to a controlled trial in which the effects of hard Brexit in Great Britain can be compared with the effects of the (relatively) softer Brexit in Northern Ireland. The emergent differences in these effects are very clearly chronicled by Professor Gerhard Schnyder on the Encompass website.

All this might be taken to bolster my recent suggestion that David Frost’s ‘Betamax’ approach to the NIP makes the time ripe for it (and him) to be jettisoned, not least since layering a political crisis with the EU on top of the economic crisis seems foolish for a government that claims to have got Brexit done. But the contrary possibility, outlined by, amongst others, Baroness Jenny Chapman who leads on Brexit for Labour in the House of Lords, is that Johnson and Frost will escalate the NIP row into such a crisis by following through on their threat to invoke Article 16 in order to distract from the economic crisis.

If so, it would be deeply irresponsible, and designed solely to whip up the support of the Tories’ leave-voting base and the Brexiter press. That is hardly likely to deter Johnson if he calculates it would be an advantage, but I continue to think it would be a miscalculation. The latest polls show a very sharp change in public opinion over the summer about whether Brexit has been going well (18%, down from 25% in June) or going badly (53%, up from 38% in June) since the end of the transition period. The core leave vote might well see escalating conflict with the EU as a sign of Brexit going well, but that’s unlikely to be so for most voters, including many Tory voters. Indeed it is amongst leave and Tory voters that the sharpest falls in thinking Brexit is going well are to be found.

The first Brexit winter approaches …

How the government proceeds over the NIP will become clear in the next few weeks, and how that plays out will depend on many factors, including the EU’s reaction. Crucially, what matters is whether the supply crisis continues or even deepens in the run-up to Christmas as is being warned of, as well as what happens with the Covid pandemic, which is far from over. Nor should it be forgotten that although the Brexit saga seems to have been dragging on forever, we are still only in the first few months of actually living with Brexit, and there are key elements, such as import controls, which haven’t yet been implemented. A baby conceived as the transition period ended is still only the tiniest of infants.

Yet, having dreamt of Brexit for so long, and having promised so much for it, Brexiters already want it treated as ancient history and Johnson is positively bored with it. As Treasury Minister and long-term Brexiter Simon Clarke put it this week when asked about how Brexit related to driver shortages, even to raise the question is apparently to “take us back into a negative conversation”. But enacting a massive change to the entire direction of the country on the back of a tiny, and fleeting, majority, and in the face of deep hostility from a substantial minority, whose concerns were not just ignored but jeered and sneered at, was never going to work like that.

At the very least, the onus was on the Brexiters to show that they could make their project a success. As we approach the first winter of Brexit reality, it is telling that not only is no such success in evidence or in prospect but that they don’t even want to talk about it anymore. Perhaps that at least shows a degree of political sense, if not any contrition.

What is far more surprising is that, despite the opportunities it presents for Labour, discussed in my previous post, and despite the fact that a miniscule 3% of Labour voters think Brexit is going well and a whopping 81% think it is going badly, Keir Starmer’s party remains almost equally unwilling to do so (£). I suppose they don’t want to threaten the commanding lead in the opinion polls that their policy of Brexit reticence has bestowed them. Oh, hang on

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