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It’s time to come clean on Brexit


As the Tory party, once the natural party of government, continues to drag the UK through a climate of chaos of almost zero modern historical equivalence, we must ask ourselves “how did we get here?” 

In answer to this, we must admit the un-admittable: it’s Brexit. 

The decision by David Cameron to hold a referendum on EU membership was a misguided one taken solely in the interest of party survival. He feared a rising UKIP, and the potential for a split in the party along eurosceptic lines. That decision was an overreaction. UKIP was never a serious electoral contender, and the few MPs who did defect are best described (in Cameron’s own words) as “fruitcakes and loonies”. 

He further should have recognised that referenda are incompatible with the UK’s parliamentary system, and that, without a very clear understanding of what Brexit would entail, a Leave vote would inevitably cause a rapid deterioration in the binding fabric of the Conservative Party, just what he had initially feared. 

The latter is exactly what has happened. The Conservative Party is falling apart because no one knows what Brexit really means. Vote Leave was an umbrella over a smorgasbord of wholly inimical visions for the future of Britain. It simultaneously proposed free trade with economic protectionism, the end of free movement with more skilled immigration, and a greater role on the world stage with exclusive sovereignty. 

As Theresa May desperately attempted to guess her way to consensus, she tried and failed to pass a deal that neatly displayed Brexit’s incoherence. A “backstop” involving emergency membership of the customs union, designed to prevent political violence in Northern Ireland (something Brexit supporters claimed Brexit would heal) was seen as incompatible with demands to end free movement and completely exit from any regulatory control from Brussels. 

Boris Johnson’s deal, nearly illegally pushed through parliament, was a roughshod and unworkable (more on this later) solution to the question of Northern Ireland. It prioritised a very particular kind of sovereignty over economic, political, and social good sense. 

These might lead you to think that Brexit was about sovereignty.  

Yes, in part, but not wholly. To many on the Tory right (and to their extremely wealthy donors), Brexit was a vision of reconstructing the UK’s economy as a “Singapore on Thames”: low-tax, low-regulation, small state “utopia” (dystopia). That was the vision of Kwasi Kwarteng and the cabal of intransigently ideological right wing fanatics. It is worth noting that Liz Truss should not be considered a member of this group because Liz Truss doesn’t really think anything at all. Her political thinking is as empty as her charisma. 

This vision for Britain is evidently nonsensical but also, crucially, not what many Brexiteers (in parliament and public) wanted. She isolated everyone but the most extreme right. 

As such, after 45 days of terrifying incompetence, confusion, and turmoil, Truss resigned. 

The internal incoherence of Brexit is at the heart of her political suicide. Having attached herself to one particular strand of Brexit, she failed to administrate in a way satisfactory to anyone else, and thus the party is now on the point of rupture. 

This may sound like music to the ears of Labour members, but this schadenfreude should taste bitter. After all, there are only two electorally viable parties in the UK, and if one is in crisis, the other has no accountability. A Labour government from 2024 without a serious opposition would be bad for the Labour Party and bad for the country. 

Brexit caused this. 

So, it is clear that Brexit lies at the heart of Britain’s political crisis, though it has proven in recent times to have bled into becoming the crux of the economic crisis Britain now finds itself in. Though masked by COVID and Russia’s invasion of Ukraine, Brexit lies sinisterly in the shadows.

Boris Johnson’s deal was, economically, effectively the “hardest” Brexit possible. We are not part of the single market and not part of the customs union. It’s a bare-bones free trade deal that makes every aspect of conducting business with or in the EU significantly more expensive and painful. 

At the heart of Brexit’s economic message was that leaving the EU would allow the UK to cut red tape, reduce bureaucracy, and thus allow UK business to flourish. This was plainly a lie. The bureaucratic coat that covers the EU is extremely painful for anyone outside of it, and extremely convenient for anyone inside of it. Non-tariff barriers make as much of a difference to UK businesses trying to operate in Europe as the tariff barriers we also face. This is especially true of goods-based businesses who have to declare rules of origin, meet demanding regulatory standards, and provide endless paperwork to prove it. This means cost and inefficiency. Businesses that need to export to Europe and cannot afford to do so under current arrangements have two options: they either stop trading, or they export distribution networks onto the continent, thus getting themselves within the customs union and avoiding bureaucracy – both of which are bad for the UK economy. It is worth noting here that the growth plan of many small UK businesses involves growing first domestically, then entering Europe, then entering America. Brexit has effectively halted that second step, thus retarding the growth of UK small businesses and consequently slowing growth. 

This has resulted in sharply slowing trade intensity. Whilst other European and G7 economies, under the exact same macro conditions of pandemic recovery, war, and commodity shocks, have recovered lost trade intensity from the pandemic, the UK hasn’t. The LSE reports that the number of trading relationships between UK and EU buyers and sellers fell by around a third in the first six months after Boris’ deal came into action. The Resolution Foundation estimates that the cost of this will be around £470 in wages per worker.  

Further, business investment, ultimately the driver of business growth and innovation has plateaued since 2016. This is something that evidently scared the government enough to introduce the “super deduction”, which offers very generous allowances to investors. Even this has had extremely limited impact. No other major economy has experienced a similar phenomenon. 

Perhaps the most worrying statistic of all, the OBR predicts that the UK’s economy will not grow at all in 2023, and that the only country whose economy is expected to perform worse is the heavily sanctioned Russia. Over the long term they predict that UK GDP will reduce by 4%, costing the economy an estimated £100bn and £40bn in lost tax revenues. 

The only possible upside to the UK’s poor economic performance could have been a weak sterling. This makes imports more expensive, but should also make exports more competitive. Unfortunately, we have not seen the latter effect. In fact, Britain’s exports have never recovered from COVID lows, unlike the EU, and unlike other advanced economies. 

The UK has core underlying economic strengths: a large, educated talent pool, a critical mass of infrastructure, a multicultural and tolerant society, a robust legal system, a hugely developed financial services industry, and a (at least until very recently) stable political system – all of which have been impeded by Brexit. 

Brexit is evidently a major threat to the UK and yet it remains a political taboo. No one wants to return to the political toxicity that sadly culminated in the murder of Jo Cox. It is seen as sacred and untouchable. 

The Labour Party wants to “make it work”. The Bank of England tries to obfuscate its impact. The Conservative Party purged those who disagreed with it. 

But we need to talk about it because it is making us all significantly worse off. 

The political, economic, and journalistic elite all need to come clean, and admit that Brexit is damaging us. 

Only from that starting point can we build something better. 

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