Fri | Sep 21, 2018

John Rapley | Britain’s slow suicide sort of makes sense

Published:Saturday | December 2, 2017 | 12:00 AM
AP President of the European Council, Donald Tusk (right), shakes hands with Irish Prime Minister Leo Varadkar at a press conference at Government Buildings in Dublin to discuss preparations for the December European Council on Friday. The European Union warned Britain Friday that it must reveal by next week how it plans to keep an open Irish border after Brexit or the bloc will refuse to negotiate a new trade deal with the UK.

Britain's slow suicide sort of makes sense

The numbers are in and they aren't pretty. Britain's chancellor of the exchequer delivered his annual budget last week with a barrage of jokes aimed at sweetening a bitter pill. Britain is slowly strangling itself.

The chancellor himself estimated that reductions in future growth rates will knock several percentage points off the country's cumulative growth, limiting the resources he has available to play with. In its own budget analysis, the Institute of Fiscal Studies calculated that once Brexit is done and dusted, Britain's economy will be more than three per cent smaller than it otherwise would have been, average earnings will be £1,400 lower, and public services, already badly strained, will be further cut back.

All of this can be laid squarely at the feet of Brexit - not necessarily Brexit itself, but the chaotic way it's being done. Britain's productivity has barely recovered from its pre-2008 levels. A key driver of labour productivity is investment, both in new technology and infrastructure, and in the human capital that operates it. But amid political instability, businesses are holding off investment plans. Why wouldn't they?


It makes little sense to plough money into new machines or staff training if your business is going to lose access to its key markets in a couple years' time. Until managers get some clarity about the future, such as what sort of relationship Britain will have with Europe or what other new trade deals will materialise post-Brexit, businesses will stand pat. That won't change soon.

If productivity isn't rising, the only other way to raise economic growth is to increase labour supply. That requires immigration, the very thing the Brexit vote was designed to limit. So Britain finds itself in a bind, one of the Brexiteers' making. In principle, this could all be resolved with a clear and decisive stance as to where the United Kingdom is heading. Good luck with that. From morning to evening, ministers in the government contradict one another, and there is enough plotting going on in backrooms to fill a spy novel. Theresa May is trying to hold her ship together, but it's sprung so many leaks, she spends most of her time just trying to keep it afloat.

On the face of it, you'd think this would all be turning the slender majority of Britons who voted to leave the European Union in last year's referendum against Brexit. Certainly, the obstacles against Brexit are rising in Parliament, and the possibility of it now being reversed are greater than they were just a few months ago. But even if the Brexiteers lied through their teeth to get people's votes - didn't Boris Johnson say we'd have another £350 million each week to put into the National Health Service, when in fact we've been cutting public services? There is as yet little evidence of Bregret.

That's probably because while Britain is self-harming, Brexit isn't harming everyone equally. Those who, say, make their home in London but work in the global economy can see only bad news in the crazy course on which the country has embarked.

But for the 'left-behind', people in small towns decimated by globalisation, bad news is merely being distributed more equally now, rather than being loaded all onto them. Besides, with immigration falling, wages are starting to tick upwards. Long-term, that will damage the economy, as rising wages amid stagnant productivity will weaken British competitiveness. But ask them how their lives have changed since the referendum, and many Britons can reasonably say they've experienced a modest improvement.

Moreover, the government has so far sheltered some of Brexit's strongest supporters from its harsh consequences. Pensioners, for example, were far more likely to opt for Brexit than first-time voters. With their pensions 'triple-locked', they've been sheltered from the flat wages and rising inflation now besetting the country. Instead, the government has shifted the burden of economic adjustment on to the shoulders of constituencies that traditionally prefer other parties, or don't vote - in particular, young people.


That may not be sustainable, though. Economically, with austerity set to worsen, the government may eventually have no choice but to break the triple-lock and dip into its pension kitty. Politically, the Tories know they face a bleak future if they don't make some show of winning the hearts and minds of young people. The chancellor tried a bit of that in his budget, something which won plaudits in his party. But if the enthusiasm doesn't transfer to the electorate, he may have to find ways to do more - which would mean having to redistribute austerity.

Should that happen, the electoral calculus behind Brexit might well change. But even then, the Remain camp still needs to craft an inclusive narrative which makes those hurt by neo-liberal globalisation feel there will be a place for them in a renewed Europe. Unless they can convince these people that what they offer is not a return to the status quo ante, they will probably find support for Brexit pretty stubborn.

- Originally published on brixtonsubversity.

n John Rapley is a political economist at the University of Cambridge, and has been writing for The Gleaner for more than 20 years. Email feedback to