Hard truths about a hard Brexit

I’m helping making marmalade at the moment. Messy but satisfying. An early New Year diversion from Covid-19 and the Brexit-induced mess of our politics.

We’ve left, and Zenpolitics needs to put a marker down. This blog has been going eleven years, and it can’t let the Brexit Agreement pass without comment.

As a first and most basic proposition, we will achieve far more if we have the widest perspective – as citizens of Britain, of Europe and of the world. The one naturally folding into the other. We are foolish to think otherwise. Recent events represent a closing-in not an opening-out of our society, whatever the absurd and grandiose claims of the Johnson government.

Our Brexit divisions have often been compared to fractured personal relationships, where the only hope of coming together lies in attempting some understanding of the other side’s position.

I go along with that. It is after all what Zenpolitics espouses. But it’s hard when you’re dealing with a series of false promises, a disregard as it suits for truth and precedent. Michael Gove has expressed the hope that the agreement will see politics move away from the bitterness surrounding the 2016 referendum. He and his like fed that bitterness to serve their own ends. We are a polarised society, and that is unlikely to change.

Looking across the pond, we see Republican senators still trying to undermine Biden’s election – with no chance of success but taking what they see as a longer-term perspective – hanging in with the hard-line Trump agenda, however divisive the consequences. Brexit has bred a similar though less extreme cynicism. But the direction of travel is the same.

Johnson talks of friends in Europe, when insulting and misrepresenting them has been his trademark over twenty years.  There will be no easy coming together. Insofar as it happens it will be the pro-Europeans, who will never give up on working closely with old allies, who will be responsible.

Pro-Europeans will never abandon their position or their loyalties. They – we – know where the future lies. There must, if we are to hold any position in the world, be a coming together again with Europe. We will need another, wiser government before this happens. Taking back control is an absurd slogan – Brexit is by definition a losing of control, a losing of influence, a diminution of status, a constriction of sovereignty.

Yes, we are off-shore Europeans. We haven’t been invaded, or lost wars. We’ve no sense of needing to escape from our past. Our links with Europe are born of sympathy, common culture, convenience – not of necessity. Many of us are, as de Gaulle reminded us, closer to USA and Commonwealth countries than other European countries. But that gave us the priceless benefit of being a bridge, which we can be no more. Brexit has exacerbated an ‘outsider’ instinct, which will serve us ill.

This isn’t to downplay the issues which pushed Brexit up the agenda. Immigration was perceived to be out of control. Between 2008 and 2019 the UK’s Polish population more than doubled. Cameron’s government consistently aspired to and failed to bring the numbers down, and that helped focus the issue further.

In previous decades the failings of Common Agricultural Policy dominated debate. It rewards scale, guarantees the supply of food, and holds down prices, but in market terms it’s highly inefficient. But food was abundant, and prices were low. So it wasn’t a key issue. It wouldn’t resonate with voters.

The Leave side looked elsewhere. Fishing, however small as a sector of our economy, became a totemic issue. ‘Metropolitan elites’ likewise. The EU ‘elite’ and the ‘metropolitan’ became merged in the public mind.

Leave attached itself to the innate social conservatism of the ordinary voter. The Tory party as the party of Leave has been the big beneficiary. Opposition to overtly ‘woke’ behaviour has become a rallying cry in the popular press. Likewise, four years on from the Brexit vote, opposition, not always covert, to Black Lives Matter.

The likes of Douglas Murray stir the waters with articles in The Spectator and elsewhere. AN Wilson sounds off in The Times against the Archbishop of Canterbury. Johnson would rather be above all this but, being one for whom popularity is the ultimate aim, he will bend before the party wind as much as he needs to.

There’s always that sense we’re governed for the benefit of party, to ensure the Tory Party retain its role as the natural party of government. That’s an old accusation, party before country, but it rings true.

Jeremy Corbin and Militant Labour lent a big helping hand. For the Tories to sustain their northern vote through to and, they hope, beyond the next election a big south-to-north transfer of funds will be required. We thought we were dealing with a party which believes in hands-off government. All the more so since free marketeers staged their internal coup (and radically reduced the Tory talent base at the same time). And yet – we now have free marketeers becoming big-state spenders. They’re the ones in cabinet. The true diehards remain on the fringes.

The government’s language is palpably foolish. They talk of Global Britain. The country has ‘changed beyond all recognition’.  It now has ‘global perspectives’. There’s a notion spread about that the EU is somehow inward-looking. Yes, in the sense that it is more stubborn and hard-nosed, as Brexit negotiations have demonstrated. It has to be, in a world where the real battleground is between the three great economic power blocks, the USA, China – and the EU.

Both sides of the Brexit debate trade statistics on the relative performance of the UK as opposed to the wider EU economy. The hard truth is, to quote The Economist, ‘Britain’s recent performance has been poor, and Brexit will be a further drag on growth.’  Taking the most recent statistics from the House of Commons Library, ‘compared with the same quarter a year before (that is, Q3 2019) [UK] GDP was -9.6%. In the Eurozone it was -4.3% and in the US it was -2.9%.’

The current edition of The Economist further underscores the hard realities: ‘Since 2005 British firms’ share of world market capitalisation has fallen from over 7% to 3%, a much greater slippage than any other large European economy. Over the same period the share of the stock of global cross-border investment attributable to British-headquartered multinationals has fallen from 10% to 6%, also a bigger drop than for any other major economy.’

It is indeed curious how a government so committed to ‘free trade’, so focused in their aspirations on our future economic performance,  should have allowed ‘sovereignty’ and the 0.1% of our economy that is the contribution of the fishing industry to be the make-or-break issues in the final months of the Brexit negotiations. The multitude of new restrictions we now face as a result of leaving the Customs Union and the Single Market were treated as secondary considerations. For a brief summary of (some of) what we face see below.*

Services, including the financial sector, along with foreign policy and defence, are not part of the agreement just concluded. In great part the Brexit deal is defined by what is leaves out.

We won’t get better deals than we got under the EU. Brexiteers thought to court China. But investment in China is now the subject of close scrutiny. The EU has, as of last week, confirmed a China trade deal after seven years of negotiation. The best we can hope to get is a mirror image. That said, China has a long memory of Britain’s arrogance in our 19th century China dealings. Hong Kong doesn’t help. And China is happily wreaking vengeance on Australia for being the first to demand an independent investigation into the origins of the coronavirus epidemic.

We also have a weakling foreign secretary.

That touches on another big issue. We have a weak government of Brexit conformists, with free market attitudes which do not connect to the realities of our times, and abilities which fall well short of the abilities their briefs require. Raab, Truss and Patel were key figures behind the 2012 book Britannia Unchained. ‘The British are among the worst idlers in the world,’ is one quote I remember. Their subservience to Cummings told its own story.

Along with ‘Global Britain’ we have a ‘brave new future’. There’s something pathetic in these rallying calls. We’ve seen them all through Covid. Big statements and then they row-back, change tack, always positioning themselves behind the curve. (This should be a case study for future students of politics.)

We’ve had a defence review where hard decisions are helped by a big expenditure splurge. We will shortly have a much-delayed foreign policy ‘integrated review’. We will have to see what it says. We do of course have a permanent seat on the UN Security Council. We’re the second biggest contributors to NATO.  We have language on our side. But match that against a big reduction in the esteem in which we, and our democracy, a direct consequence of Brexit shenanigans, are held around the world. False pride is a biblical term that comes to mind.

Students of British politics in Europe, the USA and elsewhere will also be wondering about Scottish independence, and the likelihood of a united Ireland. The Johnson government is blind to what might well be realities, and further bitter divisions.

One lesson of history is that events never deliver on expectations. And the more radical the disturbance to the status quo the more disruptive the outcome. (Disruption was of course Cumming’s avowed aim). Brexit supporters back in 2016 thought we’d get a soft Brexit. A hard Brexit was for the extremists. And what do we have?

Another lesson is that you achieve by coming together, and not by splitting apart. A third would be that you don’t define your nation and your economy on the basis of its past achievements. We didn’t win 20th century wars on our own. We dispensed with Empire long ago, and we need to dispense with hangover imperial attitudes and sensitivities. We built our 19th century economy on cheap labour and captive markets. India had no choice but to buy our cotton manufactures. We don’t have those advantages now.

The sub-continent and Asian ‘tiger’ economies got their own back in the end. We have our expertise in specific sectors, defence, aviation, high tech, chemicals. But old Ricardian notions of comparative advantage mean very little these days. Tiger economies have shown how readily they can find investment funding, and how quickly they can overtake us in areas where we thought our advantage was well set.

Trade with our biggest partner is, by a vast margin, our best guarantee of future prosperity. At the same time we need to retain a healthy degree of cynicism. The idealism of the early years of the Common Market, when aspiration and market realities readily matched, is long gone. As a major driver of reform we have done the EU a disservice by leaving. That is, ironically, another reason for wanting to remain.

We won’t of course be rejoining in a hurry. But as and when, and if, we do, the EU in all probability is some shape or form will still be there. Many Brexiteers anticipated a wider fragmentation, precipitated by our departure. They have already been proved very wrong.

We have cast ourselves as outsiders, and it’s not a good place to be.

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*Quoted from an article by Charles Grant, director of the Centre for European Reform:

‘Most British people have no idea how hard Brexit will be…

Manufacturers and farmers will face irksome checks at borders for things like customs, VAT, safety and security, plant and animal health, and much else. Services companies will lose access to the single market unless they set up subsidiaries within it. British airlines and freight firms will no longer be able to operate freely within the EU. Citizens will lose the right to travel for as long as they wish, work, study or reside in the EU. Industries and institutions that have become accustomed to employing EU citizens – including farming, food processing, hospitality, care homes, construction and universities – will face difficulties. Britain is leaving a plethora of EU agencies, such as those that deal with medicines, chemicals, air safety and food safety. The British police will lose direct access to many EU criminal databases.’

Big ideas for the future

There are big ideas about the future out there, about seizing the moment – now is the time for radical change. Two of many examples:

The Committee on Climate Change would like the much lower carbon emissions during lockdown as a stepping off point. And Wolfgang Munchau argues in The Spectator for a bout of creative destruction. Letting ‘failing’ industries and businesses go to the wall.

The aviation industry would be in the firing line on both counts. We’ve already seen Flybe go the wall. And Virgin withdrawing from Gatwick, while BA has stated that ‘there is no certainty as to when or if these [Gatwick] services can or will return’.

Nick Timothy in his new book, ‘Remaking One Nation: The Future of Conservatism’ (reviewed in the London Review of Books by Colin Kidd),  has a different take. Both Boris Johnson and Timothy ‘would claim to want to revamp the interest of the British economy in the interests of workers as well as bosses’. That is indeed very much the mandate on which the current government was elected. But creative destruction can’t take account of workers’ interests. So we’ve a clear and present conflict here.

The Thomas Cook collapse was a recent example. How many businesses, I wonder, would be allowed to go the wall? How much unemployment could the government countenance? Where would the new jobs, many if not most at the high-tech end of the spectrum, be located?

Munchau damns the EU for being ‘good at protecting existing interests’, and for ‘stifling innovation in the process’. The EU’s General Data Protection Regulation (GDPR) would hold back ‘an unparalleled opportunity for the artificial intelligence industry’. Again, we’ve a conflict – between the interests of the wider public and an open-field approach to AI.

We owe the term ‘creative destruction’ to the economist Joseph Schumpeter. It is in the very nature of enterprise and capitalism. New businesses opening up new territory. Old businesses go the wall, and workers lose their jobs.

But Munchau and his like treat creative destruction as a gospel. Likewise commentators in the Telegraph. Brexit is the great new opportunity to throw off fetters. New businesses will rise up and even as the world turns in on itself we will find major new markets which will transform our economy. The theory is excellent. The practical outcome is likely to be disastrous.

What I would like to see is a new dispensation at a European level. Retaining data privacy. But encouraging innovation – with new market opportunities open to all member states. For the UK radical approaches to innovation are far more likely to work out operating at a European level than worldwide. For Europe and the EU trading relationships are in place. On our own we’ll be one amongst a plethora of countries potentially pursuing radical business ideas, and it won’t be easy to stand out from the crowd.

Munchau fears that the EU will put constraints on, for example, an innovation fund he’d like to see set up. He may, or may not, be right. That indeed is the challenge for the EU. I don’t want to re-fight Brexit here. But I do want to see punctured some of the pie-in-the-sky hopes that some, including Munchau, have for a WTO (World Trade Organisation)-rules post-Brexit world.

Above all, his hope that UK industry unshackled from the EU and newly ‘energised’ will finally break out of the cycle of low productivity. This involves a multitude of presuppositions. If we do break out it certainly won’t be because we’ve waved a Brexit magic wand. 

The assumption now is that with an economy in crisis we’re already halfway to a new radical dispensation. But this isn’t like World War Two. People will be expecting their old jobs back, and government won’t be wanting to have them as a drain on resources any longer than it can help it.

My gripe against Nick Timothy is another one, an old one. He’s a Brexit go-it-aloner. The enemy: ultra-liberals and international elites. (‘Citizens of nowhere’, the phrase with which he landed Theresa May, he now claims refers to that elite – not to Remainers. If that’s the case he didn’t tell Theresa.)  Let the new Tory party identify with the working class, not assume that everyone’s aspiration is to rise out of it. It’s ordinary folk who should call the tune. I’ll go along with him on that. (With strong reservations about how opinion is manipulated.) Cameron conservatism assumed people would live with the elitism implicit in its attitudes. Brexit proved they won’t.

His book was written before the Covid crisis but let’s assume that he too sees big opportunities now post-crisis. They will bring a new statist, big-spending, austerity-a-dirty-words approach to the economy. Social conscience won’t be a dirty word. But social conservatism will be the dominant mood. A closed-world mentality at one level, Global Britain at another. How this will play out, who knows. The Conservative party has an old and dreadful habit of equating its own interest with that of the nation. But which interest? The market economy and the old Ayn Randian ideas, on the one hand, pitched against the big state of Joseph Chamberlain and his avatar, Nick Timothy, on the other.

Chamberlain was the great advocate of imperial preference. That idea is still there. A touch of the old divine right. But post-Brexit it will be a hot sweaty world in the engine room. We no longer rules the seas. And big ideas too easily run aground.

Big state will be important post-crisis. So too big ideas, big innovation. Building out from a world which may or may not be changed forever. But if we imagine we can do this alone, without Europe, we’re badly mistaken. Yes, we could become a fifty-first state. Some may prefer this. But going it alone should never be an option. We need that agreement with the EU by 31st December.

Munchau argues that ‘compared to the great lockdown, the effect of a WTO Brexit would be small’. True, but it assumes people at large will be prepared to accept that the economy doesn’t get back to its pre-virus levels. That they won’t mind us limping along for a while, in the vague hope of a new wider prosperity further down the line. It looks to me dangerously like using the virus as a cover for the economy under-performing.

We’re on dangerous ground here. But an economy and overseas trade operating on WTO rules looks to be what we will have unless a new wisdom prevails before the end of the year.

A great sadness will be that we miss the great opportunity of working with like-minded people across Europe to build a better post-Covid world. Anyone who imagines a sudden tiger-economy-style breakthrough is simply in cloud-cuckoo-land.