Bigger problems than Brexit
By Pete North - June 3, 2022
I often regret writing anything about Brexit because it seems that most participants in the debate are crashing bores with an axe to grind, incapable of accepting that the situation has evolved and that much of the nation has moved on. There is no appetite to revisit that particular battle. The UK has left the EU and the single market, and that decision isn’t going to be reversed. The task at hand is to navigate our way towards a new settlement with the EU in recognition of the fact that the TCA as it stands is inadequate and the NI Protocol is not accepted by influential parties as a viable long term settlement.
Debate along those lines could be productive and informative but endless mithering about what could have been, or rehashing old arguments just bores me to tears. I think the one thing we can all agree on is that it should have been done differently, could have been done better, and that Brexit is very far from “done”.
To repair our trading relationship first requires an understanding of what’s going on in trade. On that score, we lack sufficient data to say with any confidence what the overall picture is. We have have plenty of anecdotal testimony but that only gets us so far. Much of the debate is clouded by disingenuous actors who talk as though we haven’t just had a pandemic, a war in Ukraine, global trade bottlenecks and shortages of workers and supplies across advanced economies.
I think it’s reasonable to say that Brexit almost certainly will exclude British manufacturing from European markets in the future, and nobody can argue that our departure from the single market has thus far been good for agriculture or fishing. Meanwhile, Britain’s newly formed regulators are nowhere close to functioning and we’ve yet to fully implement checks on incoming goods. It is assumed that in time the UK will pivot away from the EU, but the rag bag of independent trade deals doesn’t look like the free trade bonanza as advertised by ERG Tories.
The most recent ONS report on trade shows UK exports to EU remains stable, despite a sharp, short-term, fall immediately at the start of 2021. But it also says the UK appears to have become a less trade intensive economy, with trade as a share of GDP falling 12 per cent since 2019 – two and a half times more than in any other G7 country.
Some of this can be put down to “teething problems” being that the UK has lost much of its institutional memory for running an independent trade policy, which may be mitigated over time. The TCA also needs time to bed in. The TCA allows for cooperation on a range of areas including customs and closer alignment of rules on aerospace and other important industries. Any political party floating re-joining the EU or the single market is likely to alienate voters they need but there is a conversation to be had on the upcoming TCA review in 2024.
In any case, Brexit is not the main driver of rising inflation or the cost of living crisis. Brexit seems to have coincided with global disruptions, many of which would have created problems even without a pandemic. The auto industry was entering a recession, having been in a state of over-production for some years. I’d long remarked how some industries were living on borrowed time. Brexit revealed a number of systemic problems with our labour market where re-joining the EU single market wouldn’t solve very much at all.
It would even be fair to say that Britain has much bigger problems than Brexit, not least a lingering war on our doorstep and an energy crisis that shows no sign of abatement in the mid term. Our Brexit woes are barely detectable by contrast. Nobody is quite sure if we can even keep the lights on over next winter, and we have a population without much in the way of savings or pension provision. A third of Brits have no provision at all. We may be one of the rich countries, but millions are only one missed paycheque away from destitution. Another year of skyrocketing utility bills may be all it takes to push us into a state of unrest. Tinkering with the TCA isn’t going to dent it.
The big problem for the main parties is that they think Net Zero is part of the solution, and that economic revival will come from the energy transition, but this is a transition to a mineral intensive energy grid at a time when global commodities are also skyrocketing. It’s not going to happen. It can’t happen. Politicians want the EV revolution, but most motorists don’t. The Tories are leading us up a blind alley. As for rejoiners, unless energy costs for industry can be brought down, we’re heading for a long term recession, and ease of exporting goods is something of a moot point for factories who can’t afford to produce the goods in the first place.
There was some debate over Tobias Ellwood’s article saying that we should rejoin the single market, but anything that ties us to EU energy and climate policies can only make things worse. When we need to embark on a massive building programme in the energy sector, the last thing we need is the EU’s carbon border tax. In any case, Ellwood’s fantasy isn’t going to happen. Hardcore remainers would never allow it. They would oppose such a move for all the same reasons they opposed it before and will sing from the same hymn sheet as the ERG, just like last time.
It should also not be forgotten that the vote to leave the EU was influenced by the economic climate. The single market did cause downward pressure on wages, increased labour competition and competition for housing and healthcare provision, but even if you don’t agree the EU was at all responsible, it still the case that the arteries of the British economy were clogged and structural problems such as the housing shortage weren’t going away.
As with energy, we’re looking at decades of policy neglect. Britain was always headed for an economic and social crisis irrespective of Brexit. We could partially roll back Brexit but that’s like restoring a computer from a corrupted backup. It may temporarily restore some functionality, but eventually it encounters the same fatal system error.
I certainly never made the case that Brexit was the whole of the solution, but it certainly gives us the freedom and the headroom to innovate in policy. The problem we face now is much the same as before. Our political class is no longer capable of policy innovations or thinking outside of the box. We are now in the post-democratic age where the real power lies in the hands of the respective blobs we euphemistically call civil society; the Brussels disease, where the top tiers of policymaking are influenced by overeducated and underexperienced elites with no foot in the real world and marinated in climate dogma. Our academic community conforms to a singular groupthink which holds that the only solution to any problem is for the corporate state to have more power.
Thus we arrive at our original Brexit ethos that Brexit alone is no solution without democratic reform, and that economic revival is not possible without political renewal. You can take our elites out of Brussels but you can’t take the Brussels out of our elites. I argued at the time that it was unrealistic to expect much from Brexit unless Brexit was also a catalyst for political change. That the reform potential has been squandered is perhaps the most depressing aspect of Brexit, but it may be that the serial incompetence of our establishment combined with a winter of no heating might just be enough to re-awaken that sense of rebellion. It’s going to take more than Brexit to get Britain back on track.
