Friday 21 October 2022

Total disarray

It’s becoming hard to write this blog without being repetitious and, in being repetitious, introducing a distasteful ‘I told you so’ tone. But distasteful as it may be, the deepening chaos of the fortnight since I last posted, which saw Kwasi Kwarteng sacked, the government’s economic policy abandoned, Suella Braverman resign, and culminated in the resignation yesterday of Liz Truss herself, only underlines the comment I made in August. At that time, with Truss’s leadership victory expected but not yet announced, I wrote that: 

“When this strange summer ends, it will not herald the end of the period of political instability any more than the events and crises of the summer are peculiar to the season. This isn’t a holiday that has gone horribly wrong, it’s the latest instalment of a reality there is no taking a break from. That political instability began with the 2016 referendum. Having a new Prime Minister is not going to finish, but is a part of, this post-2016 story”. 

That’s not, however, to pretend that I predicted just how quickly things would unravel, to the extent that in my most recent post, following the ‘mini-budget’, I was writing that the wheels had come off the Brexit bus. It’s that last point that needs to be emphasised as forcefully as possible, in order to understand both the crisis happening now and the fact that the instability will continue when Truss is replaced next week. This is not just any old political and economic crisis, and it is not just the political and economic crisis of an unusually inept and extreme Prime Minister. It is centrally and unavoidably the latest instalment of the rolling political and economic crisis that started with the referendum.

This isn’t just a crisis, it’s a Brexit crisis

It's a point made with great clarity by Guardian columnist Jonathan Freedland, who wrote that “when the textbooks of the future come to the chapter we are living through, in the autumn of 2022, they will start with the summer of 2016: Brexit and the specific delusion that drove it”, and concluded (this was a week before she actually resigned) that Truss “is finished, a hollow husk of a prime minister. But this is bigger than that. The Brexit bubble has burst”. In a similar vein, writing in The Atlantic, Helen Lewis argued that Truss “has failed because she is a born-again Brexiter, and had already swallowed the lie that reality can be bent to ideology”. Nor is it just British commentators who can see it. “The roots of Truss’s budgetary bedlam lie deep in the soil of Brexit”, said Ireland’s former Ambassador to the UK, Bobby McDonagh, in the Irish Times and it is a view very widely shared in the foreign press.

It won’t fly for Brexiters such as Sherelle Jacobs of the Telegraph (£), to denounce as “bunkum” put about by “diehard proponents of Project Fear” the analysis that Truss’s “foolhardy mistakes trace back to the hubris that Brexit unleashed”. For, on the one hand, her fellow-columnist Jeremy Warner opines (£) that current events show that “Project Fear was right all along” whilst, on the other, Allister Heath, Editor of the Sunday version of her paper, urged Truss to “hold her nerve” (£) in pursuit of those very mistakes so as “to deliver a Brexit that actually works” (£) and, bizarrely, John Longworth insists that Truss was brought down by “anti-Brexiteers” (£) as part of their ongoing attempt to derail the Brexit ‘revolution’. Either way, then, Brexit and the mini-budget that ended Truss’s premiership are inseparable.

So, too, are they inseparable in the mind of another Telegraph columnist (£), Ross Clark, but in a different way. In his view Britain has “blown Brexit” by failing “to create a more dynamic, opportunity economy”. However, Truss and Kwarteng had “correctly diagnosed” the problems and their mistake was “unleashing a massive welfare programme” (meaning the energy support package, the one part of the mini-budget that markets were not concerned about), whilst Braverman’s frenzied preoccupation with immigration was misplaced as the real danger is a brain drain from the failed experiment of Brexit.

It must be strange indeed to inhabit the increasingly unhinged world of the Brexiters’ house journal. Another of its columnists, Tim Stanley (£), seems to think that the financial markets have exacted the “revenge of the remainers”, with Truss the “victim of a coup”, and that “hitherto the argument against Brexit was emotional, but watch as it becomes technocratic” with “the grey men” saying it is “unaffordable”. It’s a bizarre about-turn, given that for years we have been told that the genius of the leave campaign was to appeal to emotions, and that remainers have always been dull technocrats, preoccupied with affordability.

Equally contradictory is the way that, whilst Stanley and others are weeping about the Establishment victimizing poor little Truss, the paper also reports (£) that Nigel Farage and those on the right of the Tory Party have been fulminating that the real problem was with Truss herself for being in the process of betraying Brexit, and Braverman’s resignation letter, in its comments about failure to honour commitments to reduce net migration, gestures to the same critique, itself a derivative of the disjuncture between different threads of the Brexit coalition and their different priorities.

Counting the cost of Brexit’s fatal flaw

There’s not much point in trying to make sense of all this for the very good reason that none of it makes any sense, certainly not in combination. It is the last gasp nonsense of people who know their Brexit project has failed and are flailing around to make sense of why, and to decide who to blame (they, themselves, being invariably exempted). Perhaps the most striking example, trivial in itself and yet, somehow, also highly revealing, is a comment from Tim Stanley, not in his column but in a tweet. Bemoaning again the power of ‘the markets’ to make or break government policy he plaintively remarked that this ran counter to what Brexit was all about, namely: “Sovereignty. Democracy. Whatever the people want they get”.

For all that it is, indeed, just a tweet from a minor columnist, it perfectly captures the fatal flaw that runs all the way through Brexit, and through populism generally. It encapsulates the hopelessly na├»ve idea of sovereignty and all the myriad of ways that the ‘will of the people’ could supposedly trump any reality, whilst explaining how all those who pointed to reality could be reviled as ‘enemies of the people’. It is at once desperately sad and yet infuriatingly stupid. Like the realization that Father Christmas doesn’t exist, it would be poignant coming from a child and yet astonishing from a mature adult who writes for a national newspaper.

Sad and stupid as it may be, what is unforgiveable is the now indisputable damage that has resulted, with all of us paying the price for such delusions. The economic damage, especially, was clinically dissected in a truly excellent Financial Times video this week, laying bare impacts on trade, investment, inflation, growth, tax revenues, labour markets, regulatory duplication and more, and explaining that these can be separated from those of Covid and Ukraine. It also identifies many of the core issues, also discussed for years on this blog, of the dishonesty with which Brexit was sold and the incompetence with which it was executed, up to and including the mini-budget.

As the video explains, it’s this budget which can be seen as the point at which what many, including me, have called the ‘slow puncture’ of Brexit economic damage became something close to a tyre blow-out, albeit that doesn’t mean that the air has stopped leaking from the other tyres (for which, see some truly shocking recent additions to Yorkshire Bylines’ meticulously curated ‘Davis Downside Dossier’). And this is only to speak of the ongoing economic effects, without beginning to consider all the other harms. In any case, these harms are interlinked, for even if the mini-budget wasn’t an economic blow-out, it most certainly caused the political blow-out of Truss’s regime which in turn further exacerbated the damage to the UK’s global reputation as a politically stable country.

Overall, then, the current political chaos and economic turmoil have served to crystallize what has actually been under way for a while. Having won the 2016 vote for Brexit, the Brexiters have comprehensively lost the battle for the post-Brexit narrative which began at the end of the transition period, when the reality of being outside the EU began. There have been ebbs and flows in that battle but, although there will continue to be skirmishes, it is now effectively over. There is very little prospect that the majority public verdict that Brexit was a mistake will ever now change. If anything, that view is likely to solidify and grow. There is never going to be – indeed there never has been – any great national celebration of Brexit liberation. Hence all the weird contortions of so many pro-Brexit commentators and the embarrassed silence of others.

Breaking the silence?

Yet as the FT team – which has been consistently superb in its Brexit journalism since 2016 – also points out in its video, there remains a ‘conspiracy of silence’ about Brexit that extends beyond that of once garrulous commentators to encompass pretty much the whole of the Tory and Labour parties. Again, there have been countless posts on this blog about that ‘taboo’. The key question, then, is whether that will continue. Or, more likely, the key question is how and by whom it will be broken since it would seem absurd, and probably untenable, for the public narrative to have settled without the political discourse of the main parties responding to that.

It is highly unlikely that the current Tory Party will break the taboo as it enters yet another leadership contest. On past evidence, the realities of Brexit will scarcely be acknowledged and certainly it is almost impossible to imagine that any candidate doing so would have the remotest chance of winning. It would not only lose them the leadership, it would peel off swathes of the party’s electoral support to a rejuvenated Farageist outfit, such as is already being touted, and make its already bitter divisions even more sulphurous. The only real doubt now is whether Truss’s successor will be a madly extremist Brexiter or a semi-sane one.

So it is really a question of what the Labour Party will do. Of course the reasons for its near-silence are well-known. In some ways the current crisis encourages that silence to continue. For one thing, it makes it easy for Labour to avoid ‘rocking the boat’ by re-introducing the issue of Brexit to the fore of discussion: why do so when the Tories are imploding anyway? Might doing so actually give them a lifeline? For another – or perhaps it is a version of the same thing – it may be more effective to depict the crisis as a total failure of the Tory government, and not link that to Brexit specifically.

But there are several good counter-arguments, and they need to be thought about urgently because there must now be every possibility that there will be a General Election in short order. One such argument is precisely that a key part of the Brexit disaster is that of reality-denial. Until that denial is ended, there is no solution to Brexit or to the ‘Brexitification’ of politics. Another is, indeed, about the markets. Many commentators see in the collapse of the mini-budget a terrible trap for a future Labour government (in fact that was the point to which Tim Stanley made his sad little response): in rejecting growing government debt, it leaves ‘austerity’ as the only policy acceptable to markets. Thus if the Tory government falls then a Labour government would be forced to make massive spending cuts.

I am certain that this is to misunderstand what the market reaction to the mini-budget meant. That reaction was to the fact that Truss and Kwarteng’s plan was based on the total nonsense that reducing taxes would deliver growth and make government debt sustainable. It doesn’t mean that borrowing to fund public spending in ways that would plausibly promote growth would meet the same fate. Such spending would include infrastructure projects, environmentally sustainable and energy-saving projects, and significantly enhanced education spending. In particular, one of the most effective ways to boost economic growth, and to reduce regional inequalities, would be to create many new universities (it’s also a good way of growing the future Labour electoral base).

Even so, this alone would probably not be convincing enough without addressing Brexit. That is for two reasons. One is that, as I suggested in a recent post, the market reaction to the mini-budget was in part a reflection of the general reputational damage done to the UK since 2016. So Labour needs to break with Brexitism to restore that reputation with the markets, quite as much as with the general population. That involves being open and honest about the choices and trade-offs of Brexit. The other is that, more tangibly, addressing Brexit would be the quickest and most effective way of boosting growth, yielding fruit much earlier than, say, infrastructure spending.

A way forward?

A report from the Tony Blair Institute this week sets out the case, both political and economic, that Labour might adopt for a closer and more harmonious UK-EU relationship. It doesn’t go so far as advocating single market membership, which would certainly be a much stronger basis for economic growth than what it does propose, and that’s partly because polling doesn’t show enough public support for it. That could change, quickly, perhaps especially were Labour to provide leadership for it. But if there is an early election there may not be enough time now for that to happen.

So there’s a case to be cautious. One of the big prizes of – finally – talking about the realities and the choices of Brexit is, precisely, to be realistic, and that includes doing what has signally failed to be done before, namely to deliver a post-Brexit policy with some degree of consensus. Such a consensus is clearly going to be very different to what many remainers and leavers want, but what matters is for it to be something that enough of them are able to live with for now. And, related to that, part of the reputational prize is the creation of something that, by being relatively consensual, has the chance of being relatively stable.

To put it a different way, it would do no one any favours, including the EU or EFTA, for a Labour government to bring the UK into the single market only for the whole Brexit row to re-erupt and the possibility of leaving again to be immediately raised. So although the ‘Blair solution’ is much less than I, personally, would want, and certainly less than would be economically maximal, the slow and steady approach may just have to be accepted as part of the ongoing price of the madness and chaos Brexit unleashed: a long fall enforces a hard climb back. If it at least means the re-commencement of a more honest and more rational politics that would be a reward in itself, as well as contributing to a viable fiscal posture for a future Labour government. From that, campaigns for single market or even EU membership might be built in a less tortured and toxic environment. Anyway, regardless of what I want, I think the Blair route is the best that Labour is likely to go down, and, if so, it is certainly preferable to the present Labour policy.

A moment of hope?

If that analysis is right then, for all that it is hardly an exciting or enticing prospect, involving neither the arraignment of the charlatans and worse who caused the Brexit catastrophe, nor anything like a settlement of the grievances of those of us who tried to avoid it, there is at least something to be grateful for. Had the Brexiters had even an iota of skill or a scintilla of realism then they might have done even more damage than they have already done and are still doing.

In particular, perverse as it may seem, Truss has done us all a favour with her born-again Brexiter zealotry. For all its costs, having provoked a blow-out may prove to have been the quickest way of discrediting Brexitism and the libertarian, IEA version of Brexit. For Ian Dunt of the i the crisis marks “the end of the age of Brexit”, whilst in the FT Martin Wolf argues that, under Truss, “the Brexit Revolutionaries … over-reached” with the consequence that “maybe, the cold water of economic and political reality is at last breaking the UK’s Brexit fever”. Similarly, Annette Dittert, London Bureau Chief of Germany’s ARD TV, tentatively suggests that Truss’s failure could be the beginning of a turning point away from the “magical thinking” –  whatever the people want they get, so to speak  ­– about sovereignty which runs from the Brexit vote itself through the Johnson-Frost deal through to the mini-budget. She cautions, though, that the way back to pragmatism and realism will be via a long and painful process.

I would add that the next stage of that process is going to be one of continuing and deepening political crisis, because the current Tory Party is unleadable for all the reasons I wrote about during the summer leadership contest. To those will now be added the news and acrimonious scars of Truss’s implosion. It will take on a particular hue if, as is currently being floated, the Tories take the extraordinary and unconscionable step of resurrecting Boris Johnson.

That continuing crisis is going to be alarming to live through, especially if it is prolonged, rather than yielding an early election. But once an election comes, and if Labour win it convincingly on a prospectus that includes the breaking of the Brexit taboo, then there will be new possibilities which would not have existed had Truss’s version of post-Brexit Britain not crashed and burned in so dramatic a fashion.

Nothing is sure yet, of course, and this period of total disarray could take us in many directions, but one of them, uncertainly but not implausibly, is to a bridge away from Brexit and Brexitism. It is a slender and precarious bridge, lacking grandiosity of structure or much in the way of hand rails, and slippery underfoot, but it leads to a better future than seemed possible even a few weeks ago. For only the second time since June 2016 I feel slightly hopeful.

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