IT is becoming increasingly difficult to fathom how pro-Leave Tories, among them vociferous members of the so-called European Research Group chaired by Jacob Rees-Mogg, can continue to deny the real-world impact of Brexit.
While it seems embarrassment and self-doubt do not figure significantly, if at all, in many arch-Brexiters’ repertoire, the effrontery required to keep chanting the UK will somehow be better off as a result of leaving the European Union is off the scale.
UK gross domestic product figures, published on Monday, should have served as a reality check and wake-up call for arch-Brexiter Tories who are hell-bent on taking us out of the EU, with many preferring as hard a Brexit as possible.
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They should also have given the Brexiters, in Scots parlance, a “beamer”. Nothing to do with cricket or an irritating nickname for a German car but rather a reference to the embarrassment which most individuals might feel if they assure people something will be one thing and it turns out to be the opposite.
But the arch-Brexiters are neither embarrassed, nor apologetic. Rather, they remain enthusiastic and at times visibly excited about tearing the UK out of the EU, as we tick down towards the March 29 Brexit date. Damage to millions of households’ living standards appears to be of no concern to many of these individuals.
For those of us who are actually interested in the UK economy’s performance, and the implications for people’s living standards, it is worth reflecting on what the Office for National Statistics’ GDP figures told us. They showed the UK economy grew by just 0.2 per cent in the fourth quarter of last year – a truly miserable rate even by the country’s poor standards since the Tories came to power in 2010.
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UK GDP growth over 2018 as a whole, at just 1.4%, was the weakest since 2012. It was significantly weaker than the poor rate of 1.8% for 2017. The latest surveys from the Chartered Institute of Procurement & Supply have signalled the UK broadly stagnated in January.
Given the mood of the business community and consumers right now, as the Brexit date draws ever closer and stockpiling is understandably a hot topic of conversation, there is little or nothing to suggest things are going to improve all of a sudden. But there are a lot of reasons to think they might take a lurch for the worse. Things could get a whole lot more grim very quickly if the UK Government takes us down the no-deal path.
There remains a staggering lack of willingness on the UK Government’s part to do the responsible thing for the sake of millions of households and the business community by ruling out a no-deal exit. And the UK Government’s stubbornness, in terms of refusing to contemplate a volte-face on Brexit given even its own forecasts show damage under all scenarios, looks ridiculous in any kind of normal world.
The long-time sense of deep unease among businesses over Brexit appears in many cases to be developing into fear and alarm.
If Prime Minister Theresa May, her ministers and arch-Brexiters at large care to see what businesses think of Brexit, they could always have a quick look at the investment figures.
Business investment dropped by 1.4% quarter-on-quarter in the final three months of last year, according to this week’s ONS figures. Business investment in the fourth quarter was down by 3.7% on the final three months of 2017. And it has now declined for four straight quarters.
Of course, you only have to speak to, and listen to, people in the business world to find out what Brexit is doing, and will do, to them.
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The warnings from car manufacturers have been loud and clear in the years since the Brexit vote but the Conservative Government refuses to listen. The broader UK manufacturing sector is really struggling, with producers fearful of the post-Brexit future.
Remember former chancellor George Osborne’s vision of a “march of the makers” – that thing which he mentioned in his 2011 Budget but failed to materialise as his moves to slash corporation tax (while making savage cuts to welfare spending) failed to translate into increased business investment.
The failure of the UK Government’s economic policies, the centrepiece of which has been choking austerity, was writ large before Brexit. However, former prime minister David Cameron’s ill-judged decision to have a referendum on EU membership, the electorate’s vote to pursue Brexit after those in the Leave camp peddled their fantasies during the campaign period, and the UK Government’s refusal to perform a u-turn have made things much worse.
UK manufacturing output dropped by 0.9% quarter-on-quarter in the final three months of last year. And it was, in the fourth quarter, down by 1.5% on the same period of 2017.
That is before we get to actual Brexit, whether this turns out to be the abject and utter chaos of a no-deal scenario or the slow grinding corrosion of the economy caused by the loss of single-market membership.
Some manufacturers will almost certainly prefer to scale back operations, make new investment overseas rather than in the UK, or even close plants without making a huge song and dance about Brexit being the reason. After all, it would be a brave company that would risk a potential backlash from the Brexiters in terms of some kind of boycott of its products, at a time when British nationalist feeling is running high.
So the UK Government should surely think about taking the numerous cases in which Brexit has already been cited as a factor in business decisions seriously.
Back in the real world, as opposed to Brexiters' Victorian-style utopia, Scotland’s chief economist, Gary Gillespie, warned this week that a no-deal scenario was seen as a significant risk that would lead to a major dislocation to the Scottish economy. He observed the Scottish consumer sentiment indicator was at its lowest since records began in 2013, while business investment decisions had been put on hold.
His State of the Economy report declared a no-deal Brexit would disrupt logistics, supply, trade, investment, migration and market confidence, noting any shock would likely have disproportionate sectoral and regional impacts and, if prolonged, would lead to significant structural change in the economy.
Who could argue with this entirely common-sense analysis? Oh, wait a minute, what about the European Research Group?
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