Friday, 4 November 2022

Can’t pay? Won’t pay!

A couple of weeks ago I wrote that, “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”.

It's the economy, stupid!

We can see the consequences of that playing out now, and they are doing so in a particular way and for particular reasons. Those reasons are the arrival of Sunak, and the nature of the implosion of the brief Truss premiership that led to it. For Truss did two things. Firstly, she tested almost to destruction the theocratic Brexiter idea that belief could trump reality and the nationalist Brexiter idea that the UK was strong enough to buck what they call ‘the global Establishment’. Secondly, she made the central pitch of her post-Brexit vision economic performance and, specifically, economic growth. When that pitch fell apart so disastrously that brought Sunak to power on the sole basis of being ‘realistic’ and ‘economically competent’.

All this happened against a broader background of growing public concern about the economy. Since February 2022 it has been seen as the most important issue facing the country, which hadn’t been the case since May 2014. Currently, a whopping 70% of the public think ‘the economy’ is the most important issue, way ahead of the next most important (health, 43%), something likely to be exacerbated by yesterday’s interest rate rise and Bank of England forecast of a long recession. And this isn’t just about ‘the economy’ in the abstract: for example, 34% of people are less confident than they were last year that they can feed themselves and their families. At the same time, the latest polls show that 53% of people think Brexit has had a negative effect on the economy, and only 12% that it has had a positive effect.

So Sunak’s central claim of realism and economic competence is important in terms of voters’ priorities and it also necessarily brings into focus the economic damage of Brexit. How can that realistically be denied, and how can any claim to economic competence be sustained for as long as it is denied? This in turn brings into focus not just Brexit but the way that Brexit morphed into the hard Brexit of leaving the single market and customs union. The Brexiters won that battle in the first six months of Theresa May’s premiership but, now, it is just beginning to be re-litigated. How could it not be, if growth and economic competence are central to politics?

For so long as those things frame the terms of debate, rather than vague, boosterish stuff about ‘sunny uplands’, ‘Brexit freedoms’ and ‘sovereignty’, or populist slogans about ‘delivering the will of the people’, there can be only one outcome. To take just one recent example, in the words of Assistant Editor of the Daily Telegraph Jeremy Warner, “from an economic perspective there has been zero payback [for Brexit], and particularly in the area of international trade and reputation, considerable harm”. He continues by saying that those trying to “hide behind” the various global shocks that have served to conceal the impact of Brexit “delude themselves”.

An emerging consensus

This is now slowly emerging as the collective consensus, perhaps rather in the same way that the 1956 Suez Crisis, which at the time bitterly divided political opinion, gradually became established as a byword for national humiliation and disastrous folly. It has been many decades since anyone seriously disputed that. Admittedly we are not quite there with Brexit, yet, which in any case is a far bigger collective trauma than Suez. Writing in The Spectator, Matthew Parris expressed the current situation well:

“Where during these recent, turbulent years, can we identify any big wrong turning that … Britain took? The answer is lurking … but never quite surfacing. It is there in the collective unconscious of a nation but hardly acknowledged because its acknowledgement is just too painful, too ready to take us to war again – to war with each other and with ourselves. It is among the reasons the dream of an uptick in economic growth eludes us … Brexit isn’t working. We should never have left: and if we were implacably resolved to leave, we should have stayed in the single market.”

The Truss-Sunak handover is enabling this unacknowledged truth to be more widely and more loudly spoken. Shortly after its release a fortnight ago, I referred to the excellent Financial Times video cataloguing the economic damage of Brexit. Within a few days it had had three million views, and no doubt that figure is higher now. Then, last week, a shorter but equally excellent video by the BBC’s Ros Atkins, carrying essentially the same message, went viral. Tellingly, in terms of my point about the impact of Truss-Sunak, the FT film begins with the mini-budget and the BBC’s with Sunak’s promise to ‘build the economy’.

Round up the usual suspects

Unsurprisingly, with this heavy artillery pounding on the economics of Brexit, and the changing political mood, there has been an attempted counter-offensive. Because it came from the BBC, Atkins’ video, especially, had sufficient reach that Brexiters couldn’t ignore it and, of course, because it came from the BBC they subsumed it into their familiar critique of the Corporation’s supposed (though wrongly so, as Emily Maitlis recently argued) anti-Brexit bias.

Thus the ever-splenetic arch-Brexiter John Longworth, writing in the capital letter strewn style that, like the green ink letters of a former era, invariably denotes the author being a total loon, proposed that we look at “THE FACTS” instead of the Atkins video. With tragic inevitability, these were ‘the facts’ supplied by the Brexit Facts4EU website, a source whose credibility might unfairly be compared with Pravda, but perhaps not unreasonably with the Tooting Popular Front Gazette since, like Communism, Brexit has become the revolution that would have been perfect if only it had been properly tried. At all events, Brexit Facts4EU has in its own estimation produced a “demolition” of the Atkins video, using “official facts”, no less, even though such officialdom is usually seen by Brexiters as the mark of ‘the Establishment’. It also “demands” another programme, featuring – guess what? –  pro-Brexit economists “such as Julian Jessop, Andrew Lilico, Liam Halligan, Professor Patrick Minford, the IEA, and others”.

In a similar way, in the Daily Telegraph (£), Professor Robert Tombs, one of the 41 – yes, 41! – self-proclaimed ‘brains for Brexit’, was also busy denouncing the new ‘Project Fear’ (surely the most vacuous political slogan ever devised). Tombs, an eminent Professor of French History, makes no claim to credentials in economics or business, but, like the rookie art critic who may not know much about art, he knows what he likes. What he likes, and refers his readers to, is yet another of the interminable Brexiter websites, this time ‘Briefings for Britain’, for its, of course, completely unbiased assessment of the economic impacts from long-time pro-Brexit economists Graham Gudgin, Julian Jessop and Harry Western. And – again, guess what? – according to them it’s all going pretty well, and the only reason to doubt that comes from remainer economists producing “ideological” analysis.

Meanwhile, in the Daily Mail, Dominic Lawson was also outraged by the Atkins video, although much of his article was taken up with a ‘guilt by association’ critique of Mark Carney’s recent assertion that the UK economy has gone from being 90% of the size of Germany’s in 2016 to 70% now. As Lawson says, it’s an assertion that has been heavily criticised by Professor Jonathan Portes, whom he rightly refers to as both an eminent economist and as one not known as a particular fan of Brexit. But so what? For as Lawson acknowledges, the Carney claim didn’t feature in Atkins’ video.

That red herring aside, the Lawson article is an exercise in denial. Like Brexit Facts4EU and Briefings for Britain, he relies for his critique of Atkins on one of the tiny minority of pro-Brexit economists, once again the former IEA Chief Economist Julian Jessop, before finally falling back on the familiar but absurd defence that “for many millions who voted for Brexit, it was not just, or even at all, about GDP”. The absurdity is obvious. If this is the case, then why make such a song and dance about how Brexit isn’t bad for the economy? And why did the Vote Leave campaign in 2016 explicitly claim that it would be good for the economy, whilst vociferously denouncing suggestions to the contrary as Project Fear? And why, even now, is the government still pumping out ridiculous lies about the value of post-Brexit trade deals?

Crucially, it isn’t 2016 anymore, so how does the ‘not about GDP’ line now work as an argument in the context of Truss' and Sunak’s focus on the economy? Just as 70% of the public now think ‘the economy’ is the most important issue facing the country, only 18% think it is ‘Britain leaving the EU’ (perhaps reflecting that many see it as ‘done’). By contrast, at its highest, in December 2019, leaving the EU was seen as the most important issue by 71% and the economy by only 26%. In fact, throughout the period July 2016 to March 2020 more people thought the Brexit issue was the most important facing the country than thought it was the economy. (Of course these figures don’t say anything about whether or not people think that leaving the EU matters more than the economic effects of doing so, and they certainly don’t measure support for Brexit at different times. They just measure perceptions of what policy area is currently the most important. Source for all figures is the YouGov tracker.)

What makes a good expert?

Back, though, to the praise Lawson accords Jonathan Portes. He does so, fairly obviously, because on this occasion it was about a point that it suited him to do so, noting that “Portes still thinks that Brexit is not beneficial to the economy, but is prepared to reassess the extent of that as events develop”. Lawson is correct to take an openness to evidence and reason as an important quality and guarantor of reliability, but doesn’t follow through on its wider implications on where we should look for expertise. No doubt amongst the large majority of economists who think Brexit is economically damaging there are some whose opposition to Brexit is so doctrinaire that they would never reassess their position. But that doesn’t apply to most of them who, like Portes, would be guided by the available evidence, because that is central to their professional values which long precede and go far deeper than their views on Brexit.

The same is true of the vast majority of those who are not economists by profession or training, but who are economically literate and/or who have expert knowledge and/or experience of business, trade, regulation and all the other things which lie under the bonnet of the headline economics of Brexit. Speaking as someone in that category, I’m not opposed to Brexit despite evidence of it being an economic success, but because evidence and reason suggest it is, and is bound to be, an economic failure. And like, I imagine, most people in this category (in fact, like most of the general public), membership or otherwise of the EU wasn’t a burning issue before the referendum and only became so during or afterwards. It’s not the result of some lifetime of investment in the cause of EU membership.

But let’s turn that round. Does anyone seriously think that there is any conceivable evidence that would lead any of the small group of high-profile economists always invoked in support of Brexit – people who have been advocates of, and intellectually invested in, Brexit for, in some cases, decades before it happened - to change their minds? Have any of them ever even proposed such evidential tests?

In fact it’s this lack of ‘falsifiability’ in Brexiter economics (i.e. that, contrary to one well-known criterion for a good scientific theory, there is no piece of evidence which, if presented, could lead to the theory being proved false) which makes it so flawed. It’s not simply that pro-Brexit economists are in the minority because, after all, they could still be right. It’s that no evidence could conceivably make them admit to being wrong so – unlike the quality Lawson rightly ascribes to Portes – they will never reassess their view. It is also why, although any presentation of evidence will necessarily be selective, there are good reasons to expect that these economists will cherry-pick facts without even attempting to give due weight to context and counter-evidence.

That represents an intellectual failure but, in the currently emerging context, it also represents a political failure. There can be no doubt that the small group of doctrinaire pro-Brexit economists, and the nexus of thinktanks with which they are associated, have had, in their own terms, political success. Partly as a result of a compliant media that gave them huge exposure in the interests of supposed ‘balance’, and partly because they offered an economic ‘simplism’ that chimed with the simplism of the leave campaign generally, they certainly played an important role in securing the vote to leave. But, now, as well as being tarnished by their role in the mini-budget, the continued reliance on the same tiny cast of characters only serves to emphasise how comprehensively Brexit has failed.

For if it had been an even partially successful project of national liberation and renewal then, by now, there would be hordes of new devotees flocking to the cause. Instead it is still, as it always has been, Minford, Jessop, Gudgin, Lilico et al. The same old Brexit warriors, manning the now beleaguered Brexit ramparts.

The revolution has failed

It is another sign of failure that, along with the main defence of denial of the negative economic impacts of the Brexit, there is an auxiliary line of defence that it is ‘too early to judge’, and that the benefits of Brexit will only emerge in time. It’s a line which has been taken in the past by Jacob Rees-Mogg and Digby Jones, amongst others. In the latest skirmishes it is advanced by Andrew Lilico, another of the usual suspects, proposing a 40-year timescale for judgement. But as I’ve pointed out when this argument has been made before, it’s utterly without merit. Not only were no such timescales mentioned when Brexit was sold to voters but, if they were envisaged, then it makes it all the more reckless that the leaving process was undertaken at such breakneck speed, with the early triggering of Article 50 and the refusal to extend the transition period.

In any case, it’s transparently obvious as a means to avoid accountability, not just by deferring judgement for so long as to be politically meaningless but by ensuring that the already evident attempts to claim that Brexit effects can’t be separated out from the impact of other events become irresistible. Effectively, the Brexiters disallow predictions, on the basis that they rely on forecasting models, and then disallow retrospective evaluations, on the basis that they rely on counterfactual models, so Brexit can never be judged; or, more accurately, on the basis of these arguments they disallow all predictions and retrospective evaluations other than their own, so their judgment of Brexit is the only one they accept as valid.

Of course these rear-guard attempts to deny the failure of Brexit don’t all take the form of trying to rebut the evidence that it is so. Some, like Tory MP Tim Loughton, at least implicitly accept it but still flounder about with the idea that “the EU are not making it [trade] easier for us” because of being “sore” that the UK has left. Obviously that ignores that the UK chose to make trade more difficult for itself.

That familiar victimhood narrative, so central to Brexit, is also evident amongst Brexiters like Professor David Blake of Briefings for Britain, who believes that a “remainer coup” has taken place, and Tim Stanley in The Telegraph (£) who accepts that “the Brexit revolution has come to an end”, with both postulating that single market membership may return, and both couching what is happening in terms of ‘the elites’ taking back control. It might be wondered why, if these elites are so powerful, Brexit ever happened in the first place and, as so often, it’s possible to glimpse how much easier it would have been for the Brexiters to sustain their sense of victimhood had it not done so.

What can also be glimpsed in Stanley’s piece is the sheer adolescence of some Brexiters when he gripes that he misses “the hope-filled Sturm und Drang of early Brexit, of the sense of forces unleashed and institutions scaled. One could almost hear the glass shattering in Whitehall”. He is not alone. That same kind of ‘disruptor’ mentality has been a significant strand of Brexit, evident in the nihilism of Dominic Cummings quite as much as the recklessness of the Truss mini-budget. If there is now talk of the adults having to clear up the mess, that is not, as Robert Tombs has it, to patronize those who voted leave. It is to take at their own reckoning the adolescent silliness of so many of those who urged voters to do so, and not even daring to propose it in those terms but instead with promises of prosperity now cruelly broken.

Those broken promises are now all too evident, and not just in headline figures about trade and growth. Increasing attention is now being paid to the disaster – discussed many times on this blog – of double regulation, for example in the cases of the chemicals industry or of the rapidly approaching deadline to make the UKCA mark mandatory. Remember the referendum campaign when, to the extent such things were discussed at all, the ‘simplist’ demand was ‘why should all British businesses comply with the EU regulations when only 12% of them trade with the EU’? Now we see the answer: the alternative is to hamper those businesses which do trade with the EU or which, unknowingly, supply them, by forcing them to follow two sets of regulation.

The ‘Home Office crisis’

Finally, away from economics, but very much in the headlines, we see that far from fixing the ‘migrant crisis’ – a crisis which is in fact a crisis of the abject failure of the Home Office to create adequate processing facilities for the, by international standards, very small number of asylum seekers to the UK – Brexit has inflamed it. That’s partly because the UK is no longer part of Dublin III Regulation, one provision of which can in some cases allow asylum seekers to be returned to the first EU country they arrived in. At the time of the exit negotiations the government claimed that it would negotiate bilateral deals with EU member states to the same effect, but it was yet another Brexit pipe dream, with EU countries responding that Brexit Britain could no longer “count on European solidarity”.

Yet, unlike the economic consequences, there is little sign of political and public awareness that this crisis is in part another Brexit crisis. Instead, there is a literally inflammatory and proto-fascist response stoked by vile talk, including  from the Home Secretary, of an “invasion”. There is also revived suggestion of a ‘Brexit 2.0’, in which the UK leaves the European Convention on Human Rights rather than perform the straightforward administrative task of creating a rapid processing and humane housing scheme for asylum seekers who, even aside from the moral issues, could make a superb contribution to British life including, indeed, to economic prosperity.

All this is not just depressing but shameful and disgusting, as well as being an insufficiently recognized indictment of Brexit and, being an issue where opinion still divides along remainer-leaver lines, a reminder of one of the deep-seated roots of Brexit.

The won’t of the people

Nevertheless, that doesn’t negate the wider way in which Truss’s failure and the advent of the Sunak government is bringing a new public realization of, at least, the economic failure of Brexit. Apart from that being logically entailed for the reasons I gave above, there is also already some opinion poll evidence for it, although it is complex to decipher. Sir John Curtice's analysis does so, in particular by showing that, although the gradual growth of opinion that Brexit was a mistake hasn’t been much affected by the mini-budget, the mini-budget has deepened the negative view of Brexit, and especially amongst those who, whilst having voted leave in 2016, would now vote to rejoin.

So this is in line with my suggestion that the public view has gradually but very clearly shifted to Brexit having been a mistake since the end of the transition period, and is now solidifying as economic issues come to the fore. My expectation would be that, to the extent that these issues are set to dominate the coming political period, this new attention to its negative economic realities will also dominate discussion of Brexit, and that sentiment will turn more widely and more deeply against Brexit, although there must be an upper ceiling to that.

Related to this, for all that for some time to come we will go on hearing the squeals of the usual suspects in their last-ditch defence of the failed project of Brexit, we now very rarely hear what used to be the bullying battle cry of it being ‘the will of the people’. There is a good reason for this. There has barely been an opinion poll since August 2017 which doesn’t show a majority view that Brexit was a mistake. After that date, the split of opinion was often close but since June 2021 it has been inexorably growing so that now, excluding don’t knows (who have run steadily at about 12% throughout), only 39% think it was right whilst 61% think it was wrong to leave. So Brexit is certainly not the will of the people, and, with the central focus of politics now on the economy, politicians need to catch up. Increasingly, voters won’t be willing to pay the price this failed and unpopular project is exacting.

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