BORIS Johnson and Emmanuel Macron offered very different perspectives on Brexit in their new year messages, as former Monetary Policy Committee member Danny Blanchflower again encapsulated what the situation will mean from an economic and societal standpoint.
So, what should we make of the starkly contrasting takes of Mr Johnson and Mr Macron in the wake of the UK’s narrow trade deal with the European Union?
Over the festive season, Mr Johnson has generated a remarkable amount of hot air and noise, even by his standards, about the benefits he claims Brexit will bring. He seems utterly undaunted by the Brexiters’ failure in more than four-and-a-half years to demonstrate any meaningful economic benefits of leaving the European single market. In the real world, the evidence of the damage so far in terms of a drag on UK growth over years, and the Brexit woe to come, has piled up fast.
READ MORE: Ian McConnell on Brexit: We are now all bedevilled by bitter fruits of Tory division: Opinion
As we contemplate a difficult year ahead, amid the escalating Covid-19 coronavirus crisis in the UK, it seems more important than ever that people are aware of what Brexit will, and will not, bring.
Mr Johnson declared in his new year message: “This is an amazing moment for this country. We have our freedom in our hands and it is up to us to make the most of it.”
This declaration, while utterly exasperating from a perspective which takes into account economics and simple arithmetic, is entirely in keeping with the Brexiters’ message all the way through.
The Brexiter propaganda recipe goes as follows. Assert and celebrate “sovereignty”. And claim the UK in some way did not have sovereignty as part of the EU (a claim which is bizarre but is nevertheless made repeatedly). And then declare everything will be better with Brexit. Then repeat ad infinitum.
Of course, for all the big talk from Mr Johnson about making the most of an “amazing moment”, the truth of the matter is that the UK was not in any way whatsoever undermined economically by being part of the world’s biggest free trade bloc. Quite the opposite. Being a member of the bloc has boosted greatly the UK’s economic wellbeing, with valuable immigration enabled by free movement of people to and from EU countries and truly frictionless trade. Membership has also maximised the potential for UK exporters selling to the EU and further afield. After all, the EU has had real clout when it has come to negotiating trade deals with countries around the world.
Brexiters have made a huge amount of noise about having basically managed to replicate dozens of trade deals the EU has with countries around the world. The Johnson government and Brexit camp at large have often seemed keen, given the utter failure to get anywhere near the big, brave new trade deals promised by the Leave campaign before and after the 2016 referendum, to portray these rollover agreements as new things. Skating over the actuality that these are essentially deals the UK had as part of the EU.
Mr Johnson’s extreme enthusiasm for Brexit was, of course, not confined to his new year message.
He declared on the BBC’s Andrew Marr Show at the weekend that Brexit would enable Britain to “think globally” and “think big”.
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When asked by Mr Marr about the 159 pages of a UK Government handbook of rules for exporters, including red tape and new declarations for those trading with EU countries, Mr Johnson replied: “Of course, there are going to be changes and we’ve made that clear. And actually I think that there’s a great opportunity for British SMEs and for exporters of all kinds.”
It seems the whole Alice in Wonderland thing with the Brexiters has not gone away with the end of the UK Government’s protracted negotiations with the country’s long-suffering EU neighbours and has possibly become even worse.
In what world does Mr Johnson think the loss of frictionless trade with the EU and the associated huge amount of new bureaucracy are going to encourage small and medium-sized enterprises to export more? He should in this context bear in mind the EU, as a bloc, is by far the biggest export market for UK companies. And he should not underestimate the importance of frictionless trade, over years and decades, to those SMEs which have enjoyed great success in exporting to the EU, their nearest overseas market.
How on earth is Brexit going to lead to a surge in SME exports? You can see how it would weigh heavily on such exports but not how it could possibly be a positive. Mr Johnson might be putting the most wildly enthusiastic of faces on Brexit but that does not change reality.
Mr Macron has a starkly contrasting view on Brexit to that of Mr Johnson.
While emphasising his country would remain an ally of the UK, the French President declared the Brexit decision to be built from “lots of lies and false promises”.
Mr Macron said in his new year message: “This choice of leaving Europe, this Brexit, was the child of the European malaise and lots of lies and false promises.”
Many who have followed what was promised by arch-Brexiters in the run-up to the June 2016 referendum and what has ensued would surely see great merit in this summation.
The arch-Brexiters somehow managed to persuade those who felt left behind that their woes had not been caused by savage Tory austerity, even though they had, but somehow by the EU.
Eminent economist Mr Blanchflower, who has taken up a post at the University of Glasgow while remaining Bruce V Rauner professor of economics at Dartmouth College in the US, put this well last week.
Referring to former Tory chancellor George Osborne and erstwhile Liberal Democrat leader Nick Clegg, labour market expert Mr Blanchflower tweeted: “People falsely thought the problems they were experiencing had anything to do with the EU when in reality it had zero to do with them and was almost entirely down to Osborne and Clegg’s failed reckless austerity which meant no real wage recovery.”
READ MORE: Ian McConnell: Brexit psychology laid bare in this barrage of propaganda: Opinion
In terms of the financial market view of the UK’s economic prospects in the world of Brexit, it is worth looking at sterling.
The pound received a boost on relief the UK Government was going to dodge a no-deal outcome on Brexit. However, at around $1.36, sterling remains far adrift of the near-$1.50 levels at which it traded on June 23, 2016, ahead of an EU referendum result which surprised many.
Of course, it will remain crucial to bear in mind over the years and decades ahead that Mr Johnson and his government pursued the narrowest of trade deals with the EU, one that does not include the crucial services sector. To give just one example of a short-term effect, we have seen a huge amount of EU share trading shift this week from the UK to elsewhere in Europe.
The Theresa May government forecasts show how damaging such a narrow deal will be overall to the economy and to living standards in the UK.
According to these forecasts, Brexit would, on the basis of an average free trade deal with the EU, result in UK gross domestic product in 15 years’ time being 4.9% or 6.7% lower than if the country had remained a member of the bloc, on respective assumptions of no change to migration arrangements or zero net inflow of workers from European Economic Area countries. Of course, the Tories have already legislated to clamp down on immigration.
Mr Blanchflower summed up the impact of Brexit on the economy and living standards well last week, in three separate tweets. On Monday, responding to Brexiter Tory MP Michael Fabricant, the former Bank of England MPC member declared: “Take back our freedom? What twaddle – all it has done is lowered living standards and made the UK look an international joke.”
The previous day, Mr Blanchflower had tweeted: “Never has a government expended so much time, energy and money on making its people poorer. But it is not just about the economy. This deal doesn’t simply augur the certainty of reduced prosperity but reduced opportunity. The right to work, travel… settle... in 27 other countries uninhibited. The diminution of cultural interaction and global influence. The ability to call the rest of Europe home. In return, we gain an empty husk of sovereignty, & with no concrete evidence of popular support.”
And, on Hogmanay, Mr Blanchflower declared. “The UK is now a price and regulation taker because of its small size and irrelevance so sovereignty has been reduced.”
This is the truth of Brexit. It is not an amazing moment. It will not suddenly boost the economy, having done exactly the opposite ever since the Brexit vote. The folly will not encourage SMEs to export. It will damage the UK economy, as the May government’s forecasts show – as do estimates from the Office for Budget Responsibility suggesting a 4% hit to GDP. And by obvious extension it will harm living standards.
Mr Johnson can “think big” as much as he likes. But this will not change the grim Brexit realities confronting businesses and households already under huge pressure amid the coronavirus pandemic.
And the Prime Minister should have reflected long before now on what actually happens to the UK’s influence on the global stage as a result of leaving the world’s largest free trade bloc.
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