Brexit has embedded dishonesty in British politics

There has been relatively little Brexit news over the last week or so, and perhaps the most significant was Mayor of London Sadiq Khan’s high-profile Mansion House speech, in which he said “it is now obvious that Brexit isn’t working”. Drawing on research undertaken by Cambridge Econometrics, Khan stated that the UK economy as a whole is £140 billion, or 6%, smaller than it would have been without Brexit, of which £30 billion was foregone growth in London. According to the same research, by 2035, the value of goods and services produced in London will be 7.5% lower than it would have been without Brexit, and 10.1% lower for the UK as a whole, whilst investment for the UK will be a staggering 32.4% lower than it would have been.

The speech was significant for two reasons. The first is political. Khan just about stayed within the parameters of current Labour policy by calling for a “closer relationship” with the EU, but in suggesting the need for a “more honest and mature discussion” about the negative impact, and about the benefits of rejoining the single market, he strayed further beyond it than any other senior Labour politician. That won’t have any immediate impact – the politics of remain-supporting London are different from those facing Labour nationally – and Starmer’s current stance is arguably (in my view) defensible and unarguably here to stay for the foreseeable future*. But it is slender candle in the wind, which might kindle a greater flame in the future.

The second significance is the Cambridge Econometrics study itself. Inevitably, Brexiters were quick to try to rubbish it, such as in a ‘Briefings for Britain’ article (curiously, written in the first person but credited to Briefings for Britain collectively, so we’ll never be able to assess the author’s credentials). But the fact remains that there are now at least four major counterfactual estimates, from the CER, the NIESR, the OBR and, now, Cambridge Econometrics which all show that Brexit has been damaging, albeit with a range from GDP (or in the latter case GVA) being 4% lower than it would have been to 10% lower by 2035. Each comes from a credible source, each is independent, each uses a different modelling or calculating technique, and all show a negative impact. Yet, mysteriously, all of them are wrong according to the that small group of avowedly pro-Brexit economists who, as I’ve discussed before, persist in ignoring the counterfactual question in favour of various largely bogus comparisons with the EU, or the Eurozone, or individual EU countries.

Brexiter sophistry

It is especially hard to take this group seriously when one of its most active members tweets approvingly things like this week’s Express report of a “Brexit victory” because a West Midlands firm has won some new export orders. Good news, no doubt, but there’s nothing to suggest it has anything to do with Brexit. To the extent that such empty puff-pieces have any meaning at all, it is that they grow out of one of the most disingenuous rhetorical strategies of the Brexiters. One of the ways they dismissed warnings of the damage Brexit would do as ‘Project Fear’ was to create a flawed reductio ad absurdum, so that, say, warnings of reduced investment or reduced trade with the EU were rendered as claims that all investment or all trade with the EU would cease; or claims about the EU as a peace project were rendered as claims that leaving the EU would cause World War Three to break out.

Hence, now, as with the Express report of a new investment and export contract, any piece of good news can be misrepresented as discrediting the mispresented false claim that Brexit would mean no new investment or export contract. It is doubly dishonest since it also posits as the test of Brexit not whether it has had the positive effect that Brexiters promised, but whether it has not had a negative effect.

Similar sophistry greets the release of any and every report about Brexit. Thus, this week a report in the Telegraph (£), of all places, highlighted the impact of Brexit in eroding the global standing of the London stock market. Within it, quite reasonably and correctly, there was discussion of the way that Brexit is not the only factor. But, immediately, that got taken up by pro-Brexit social media accounts to show that claims it was all down to Brexit were false, even though no such claims had been made. And, again, all the Brexiter reaction was about attempts to downplay any Brexit damage rather than to argue that, in fact, Brexit had benefitted the stock market, as if the Brexiters had sold their project with the promise ‘it won’t be too bad’.

Brexiter failure to take responsibility

This failure to take responsibility for their failed project is now endemic. The latest trade figures show that the percentage of UK trade done with the EU is now higher than before the referendum, at about 53.3%. Cue for many to declare that this showed Project Fear disproven and Brexit justified once again (see, for example, many of the responses to this Tweet). But it means nothing of the sort. The explanation is that growth in trade with non-EU countries has been weaker than with the EU. This is the exact opposite of the central Brexiter proposition about trade, which is that the EU has a declining share of world economic growth and so, ‘unshackled from the corpse’ of the ‘EU protectionist racket’, the UK would re-orientate towards the fast-growing areas of the world.

That this has failed to materialize isn’t because the UK has not (or not yet) developed many major new free trade agreements, for example with the US or India. We shouldn’t by the way, let the Brexiters off the hook by saying ‘not yet’, given that David Davis, when Brexit Secretary, claimed “it will be possible to secure bilateral trade deals with the rest of the world that are larger than the value of the EU single market within two years”. But, timing aside, such deals just don’t, and can’t, make a massive difference: CPTPP membership is expected to lead to a 0.04% increase in GDP over 15 years, the Australia and New Zealand deals together 0.1%, and a deal with the US perhaps 0.16%.

In fact, the reason the Brexiter proposition has failed to materialize is because it was always a fallacy, for multiple reasons. Global economic development in previous decades has of course meant that in percentage terms the EU accounts for a declining share of world economic activity, but that doesn’t mean it is declining in absolute terms. Nor do fast growth rates in other countries mean that, even if their international trade grows at the same rate, the absolute value of increased trade with the UK necessarily grows very much (i.e. because it starts from a small base). And, in any case, whilst being in the EU assists trade with the rest of the EU, it does not preclude trading outside the EU.

Meanwhile, the basic observation of ‘trade gravity’ – that geographical proximity is a major weighting factor on where trade occurs, something denied by the Brexiter idea of ‘post-geography trading world’ – remains well-evidenced (this also makes Brexiter glee about the poor economic performance of e.g. Germany misplaced: whether in the EU or not it is bad news for the UK if its trading partners are in trouble). Indeed, that is borne out by these latest figures.

In fact, it looks likely that the impact of the pandemic, Ukraine and, now, attacks on shipping in the Red Sea are leading to a general trend to shorten supply chains and, therefore, to make regional economic relationships more important. The Brexiters can’t be blamed for not anticipating those events, but they can be blamed for making a major strategic error in not appreciating the economic and geo-political significance of regionalization. For that is not the wisdom of hindsight: it is exactly what I spelt out in detail in a post of January 2019 – before we left the EU, before the pandemic, before the Ukraine war, before the Houthi attacks on Red Sea shipping. It’s not, as the Brexiters have it, that these kinds of events, rather than Brexit, are what have caused all our recent economic woes. It is that, on the one hand, unlike other countries, the UK has added Brexit to the list of negatives and, on the other hand, that such events illustrate the fundamental strategic flaw within Brexit.

It's worth saying that, assuming the UK starts to introduce full import controls on EU goods at the end of this month, we will see a new iteration of all these debates. Firstly, one consequence is likely to be that the figure of 53.3% for the share of UK trade done with the EU will fall a bit. That is because – to spell it out once again – increasing trade frictions will tend to make trade growth lower than it otherwise would have been. However, it won’t mean that the Brexiter ‘post-geography’ thesis is becoming vindicated. It will just mean that the relative gap between the rates of UK-EU and UK-ROW trade growth will have shifted. Secondly, using the same old trick as they did with Covid and Ukraine, we can expect the Brexiters to use the impact of the Houthi attacks to explain away the impact of import controls.

Brexiter lack of contrition

Of course, trade wasn’t the only way that Brexit was supposed to be beneficial. Domestically, it was supposed to see a re-balancing of the UK economy away from London, and away from financial services, both in itself and as the spur to the ‘levelling-up’ agenda. That was partly predicated on the anti-London sentiment that continues to define populist politics, but it was also a recognition of legitimate grievances about regional inequality and about the consequences of decisions, many taken by the Thatcher governments, to prioritise services, and especially financial services, as the key to future national prosperity. This re-balancing was supposed to mean that, whilst financial services would benefit from Brexit by being freed from EU bureaucracy, other sectors would benefit even more.

From that point of view, Brexit has also been an abject failure. The Cambridge Econometrics report was, understandably given its context, reported mainly in terms of what Brexit means for London. But, in the process, it revealed that, whilst damaged by Brexit, London is proportionately less damaged than the rest of the country, thus actually exacerbating capital-regional inequalities. That is mainly because, indeed, London has a more services-intensive economy, and international trade in services has been less affected than goods trade by Brexit.

So although, as the Telegraph report, and another this week, from recruiters Morgan McKinley estimating that there are 79% fewer newly open jobs in banking in London since the referendum, suggest that financial services have been damaged (and there’s plenty of other evidence to support this), this isn’t offset by any benefit for other sectors which, on the contrary, are as badly or even worse affected. Again it’s the opposite of what Brexiters promised. Again, the Brexiters were warned of this. And, again, it’s no defence for them to say that some of the warnings were for even worse outcomes than have so far transpired.

This also applies to non-economic issues and, of these, perhaps none more so than Northern Ireland and the politics of the peace process. Here, the warnings were clear, and made by senior politicians with direct and deep experience, most obviously John Major and Tony Blair, but they were shrugged off dismissively by Brexiters, including DUP Brexiters who called the warnings irresponsible scaremongering. Exactly how Brexit was going to play out for Northern Ireland couldn’t be said with certainty until the exact form Brexit took was known (and, to an extent, it still can’t be said with certainty). But that it would be de-stabilizing in some way or another was inevitable, if only because the fact that both Ireland and the UK were members of the EU enabled a crucial de-dramatization or blurring of issues of identity, identification, and allegiance.

As things have turned out, what it has meant in particular is the creation of an economic border between Great Britain and Northern Ireland, with all that means, at least symbolically, for the unionist community. That Brexit, and hard Brexit at that, was and is supported by unionist political leaders doesn’t negate that. And all communities of Northern Ireland are severely affected by the ongoing collapse of the power-sharing institutions and its consequences, of which this week’s mass public sector strike is one of the most serious examples.

For none of this is there the tiniest sign of contrition from any leading Brexiter, or even any admission of responsibility. On the contrary, their only response is to talk of Brexit having been ‘botched’, ‘betrayed’, or ‘not done properly’, even in those cases where they actually voted – as MPs or MEPs – for precisely the form of Brexit that we have.

The wreck of the Brexit government

Alongside all this lies the now hideous spectacle of the Tory government tearing itself apart, on clear display this week in its battle over whether to pass the disgusting and stupid Rwanda Bill in Rishi Sunak’s preferred form, or whether to add some even more disgusting and stupid clauses. At stake, here, is the bigger battle of the ‘Five Families’ or ‘Brexitists’ to slough off the last, moth-eaten, remnants of ‘traditional’ Conservatism. Or, to put it another way, the battle between those who would prefer to think, or at least prefer others to think, that they are not ‘the nasty party’ with those who are more than happy to be just that, and perhaps even think it a badge of honour.

That battle for the meaning of ‘real conservatism’ is, as I’ve argued many times before, inseparable from Brexit and, indeed, those castigating the party for not being ‘real conservatives’ are a perfect overlap with those who decry Brexit for not being ‘real Brexit’, just as there are parallels between Sunak’s plight now and Theresa May’s. I had thought that this battle would not be fully fought until after a general election loss, but it seems as if some within the ‘Five Families’ may be too impatient to wait, or perhaps that, as they pitched it this week (£), the impending loss of the election is what motivates them.

If so, it seems unlikely that they will be satisfied with anything Sunak may do in policy terms – fundamentally, they don’t think he is a real Conservative or a real Brexiter – and yet some, such as Jacob Rees-Mogg (£), seem to have recognized that ditching yet another leader before the election would be too ludicrous to contemplate. Certainly the tide went out on the Rwanda Bill rebellion, with only eleven Tory MPs – dubbed the ‘New Spartans’ by oddball ex-MEP David Bannerman – voting against the government. One rather amusing side-story was the beaching Lee ‘prolier than thou’ Anderson, who resigned as Deputy Chairman so as to be free to rebel, but then pulled out of voting against the government because some Labour MPs laughed at him (and perhaps because he could see how few were going to join him). The Brexitists aren’t yet ready, or able, to go in for the kill.

However, others, like Andrea ‘up yours’ Jenkyns, clearly think otherwise, and it can’t altogether be discounted that a new leader, calling a snap election, might not be able to snatch an unlikely victory. For one thing, there is a kind of febrile desperation in the air in Britain today, so that, faced with a choice between the uninspiringly cautious Keir Starmer and some novel, perhaps charismatic, Tory candidate, the electorate might just opt for the latter. For another thing, it wouldn’t be the first time such sudden surges in popularity have happened – remember Cleggmania? Quite who this charismatic Tory might be, I don’t know, but, after all, such things are in the eye of the beholder. Of course, it is equally possible that the Brexitists just don’t care about electability, and, as with political extremists of all sorts, ‘purity’ matters to them more than power. In a sense, we must hope that is true.

Crippled by dishonesty

If there is a guiding theme in this week’s post, it is how mired in dishonesty British politics has become. As with Britain’s economic problems, that dishonesty isn’t solely the result of Brexit but Brexit created a tipping point, embedding dishonesty to an extent from which it seems almost impossible to recover. Yesterday’s rebuke to the government from the UK Statistics Authority for its misleading use of asylum figures is just the latest example, along with the now almost routine ‘context additions’ (aka factual discredits) placed on posts on X from Sunak, or other government ministers, or government departments, or the Conservative Party. The lies and, at best, half-truths, just pour out daily.

This makes Sadiq Khan’s call for honesty both remarkable and marginal. We can’t, collectively, talk honestly about the most fundamental change made to our country’s entire economic and geo-political strategy. Indeed, we can scarcely talk about it at all. That can be blamed on the timidity of politicians, especially Labour politicians like Starmer who opposed Brexit, and surely know, quite as well as any of us, how damaging Brexit is yet are not able to say so openly. But, more fundamentally, it is the fault of the Brexiters, in both politics and the media, who have made honest discussion so difficult and toxic as to be impossible.

In doing that, they have ironically undermined Brexit itself. A habitual taunt aimed at ‘remainers’ is that they don’t trust their own country to run itself. But running our own affairs must mean, at a minimum, that the reality of those affairs can be openly and honestly discussed. Yet, with Britain having become, in their terms, an independent country, the Brexiters have created a situation where such discussion is impossible. I think the idea that EU membership means the EU running our country was and is utterly fatuous, but, looking at the terms under which the Brexiters have ensured we ‘run ourselves’ since leaving, it might be better if it did.

 

*I don’t think that point is affected by Rachel Reeves’ mention of the negative impact of Brexit this week which, although of note, seemed more aimed at the political chaos around the UK’s departure from the EU rather than at Brexit itself.

Update (23/01.24 at 10.54): Since writing this post, the article on the Briefings for Brexit website criticising Sadiq Khan and the Cambridge Econometrics study, which originally did not identify its author, has now done so. It is Robert Colville.