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Brexit: dealing from the bottom

October 10, 2019

 

Regardless of where you stand on the subject, there’s no denying that a sustained chorus of opinion is dead set against the idea of leaving the EU without a meaningful deal.

 

Besides the politicians, there’s opposition from the car-making industry, national retailers, export associations, wholesalers, trade bodies and farmers. All reckon it would be devastating. What’s more, the warnings are that the economic damage will not only be longer-lasting than claimed by leave proponents but could be permanent in some instances.

 

On top of this commercial angst comes a caution from the Institute of Fiscal Studies that even a "relatively benign" no-deal Brexit would push UK debt to its highest since the 1960s. The think tank estimates that borrowing would produce a total debt equal to 90% of national income.

 

The IFS claims the government lacks an “effective fiscal strategy" whilst the National Farmers Union is outraged by Whitehall plans to leave 88% of imports untaxed in a no-deal scenario. Such an outcome would leave members facing tariffs on exports while overseas rivals are untaxed.

 

Even if you don’t buy into the view that Brexit is bad for business, none of the current signs give a warm feeling about the future.

 

Productivity in the UK dropped like a stone in the April-to-June quarter, according to the Office for National Statistics. Both services and manufacturing sectors saw a fall in the same period, representing a decline in growth not seen since the 2008 economic downturn.

 

Britain's retailers have reported their worst September on record, according to industry figures, with the "spectre" of a no-deal Brexit blamed for weighing on consumer spending. The BRC said the headline sales decline was the worst since its records began in 1995.

 

It is against this depressing backdrop that disjointed negotiations with the EU to secure an exit deal have predictably hit the buffers.

 

Boris Johnson remains on a do-or-die footing and has pledged to block any Brexit extension. Events however show that MPs are just as worked up about opposing anything that doesn’t safeguard the nation’s interests.

 

Successive clashes in the Commons and the Supreme Court have set out the road ahead and the truth is that it doesn’t look like it’s a minority government that will be doing the driving.

 

The view among Westminster watchers is that Boris and his cadre of strategists have long concluded that any work in Brussels is fruitless given that a proffered deal package would stand less chance of getting through a hostile parliament than anything conjured up by his luckless predecessor.

 

At the time of writing, matters look likely to come to a head on the 19th of this month. The outcome is expected to be messy.

 

Consequently, and having worked through a checklist of pre-planned steps, Team Boris have reached the stage where the Prime Minister gets portrayed as a potential Brexit martyr in advance of going to the country via the ballot box.

 

It’s all high risk-strategy stuff and potentially just as damaging for the future of the Conservatives as it could be for the country.

 

Nevertheless, winter is coming – and so is an election.

 

 

 

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