First we hear from the International Monetary Fund that the UK economy is bottom of the G7 class. Then come the absolutely disastrous export figures for October-December from the Office for National Statistics: the volume of exports was more than 9% below the pre-pandemic average. This compares with a double-digit increase in Italy’s exports – er, yes, a country which is still a member of the European single market.
There was a time when devaluation of the pound revived exports. No longer. Brexit and the damage wreaked by a succession of Conservative governments have seen to that. The pound has been spectacularly devalued against the dollar and the euro since the Brexit referendum. This has done precious little to boost exports but has had an all too obvious effect on import prices. Hence inflation in the UK is worse than in other industrial countries – thanks to, guess what, Brexit.
The nation is slowly waking up to the disaster. It was always going to be personal experience and the obvious malfunctioning of ways of life we took for granted that would drive the message home.
The thinning of supermarket shelves was an early sign. The dreadful delays at channel ports have been another. Ministers’ attempts to blame anything but Brexit have made them an even bigger laughing stock than they already were. Multinationals, for obvious reasons, no longer see Britain as a base for their operations in the single market, because it isn’t.
I say Britain advisedly, for, as Rishi Sunak has noted, in remarks which qualify for the expression “blowing the gaff”, that one part of the UK remains in the single market: the part, Northern Ireland, which President Joe Biden visited last week and where he urged the Democratic Unionist party to count its blessings and prepare for a stream of inward US investment – obviously having the single market in mind.
For the mainland, it is getting a lot worse, not least for small and medium-sized companies. There was a heartfelt letter in the Financial Times last week from Charles Mason, managing director of Cluny Lace, who said that after “more than 200 years building our business”, his firm has “now been killed off by our own side in a couple of years”. He said: “Good luck to those British companies who want to import from the EU when the post-Brexit customs checks start.”
But it is not all Brexit. Brexit is the last straw after a succession of damaging, mainly Tory, policies: ironically, these were justified as being in the interests of business, investment and productivity. But the Thatcher governments from 1979 onwards inflicted serious damage on the economy. I have covered this in my books Mrs Thatcher’s Economic Experiment and Britain Without Oil. Blessed by the windfall of North Sea oil, the Thatcherites refused to use this bonus to invest for the future. As one minister cynically commented: “We used North Sea oil to finance unemployment.”
I wrote elsewhere in the Observer last week about the sad death of Lord Lawson. We were friends, but in my book Mr Lawson’s Gamble I explained why we were at odds over economic policy: his “dash for growth” ended in the second-worst British recession of the postwar years, doing nothing for the investment that provides the seed for future economic growth, and hence better living standards.
After what to my mind was an unnecessary two-year freeze on most public sector investment, the Blair/Brown governments of 1997-2010 had some success in reviving investment. In opposition, David Cameron and George Osborne approved of their plans. Then, when they took over as prime minister and chancellor in 2010, they presided over a period of austerity which, once again, inhibited the investment that is a fundamental requirement for higher living standards.
So here we are – with an economy suffering the cumulative effects of poor growth or absolute decline in real incomes – and along comes Brexit. And what does former remainer Keir Starmer do? He ignores the open goal of the government’s disaster and says “make Brexit work”.
Now, according to a recent poll commissioned by the Constitutional Society, if Labour were to face facts and argue that Brexit was a mistake, its share of the vote would actually increase. As Prof Andrew Blick of King’s College London says: “The party seems to have drawn the conclusion that it cannot come back into power if it criticises Brexit. But this polling suggests it is mistaken.”
I agree. This government does not deserve to be re-elected, but it seems to me that Sunak, with his point that Northern Ireland has been offered the best of both worlds, has most certainly got that message.
Indeed, by eschewing Brexit and resorting to a nasty – and stupid – anti-Sunak poster campaign, Starmer has been embarking on a diversion from the big issues which could seriously damage his chances. I fear that he is making a strategic mistake of historic proportions.
