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Moving beyond the blame game of Brexit

Good afternoon. This was the week when Rishi Sunak sought to reboot the Conservative party’s relationship with business with a summit for FTSE 100 chief executives, spurred on by fears that Labour is now stealing a march with the boss class

The obvious difficulty for Sunak is that a bit of Davos-man veneer cannot cover up for seven years of destructive uncertainty that his party has inflicted on the UK economy, primarily as a result of its handling of Brexit, which has toxified politics and policymaking. 

Readers of this newsletter need no rehearsal of the facts: that UK business investment has flatlined since 2016, while “buccaneering Britain” has put in a woeful trade performance relative to G7 competitors. The question is what to do about it. 

And here’s where the much deeper problem lies because the politics of Brexit continue to preclude an honest reckoning with the UK’s economic challenges. These are certainly not all caused by Brexit but are equally not eased by the headwinds that result from that decision.

Take the welcome pack for delegates to Sunak’s event. It included, without irony, the statements: “This government is committed to removing barriers to trade” and “UK exports are performing well”. 

The denialism is politically understandable. Part of it is born of straightforward political embarrassment at how a succession of Conservative governments have used the “control” that they repatriated from Brussels.

Brexit was always more of a warm feeling than a cogent plan. As Boris Johnson himself put it on the morning after the 2016 referendum: “Oh shit, we’ve got no plan” (See Johnson at 10: The Inside Story by Anthony Seldon and Raymond Newell that was serialised in The Times this week). 

And seven years later, the UK is still groping towards a Brexit solution, with the conversation hobbled by the reality that both main political parties are not interested in too much confrontation with the facts because of where that conclusion takes them.

Both have ruled out rejoining the EU single market or re-entering a customs union with the EU, which are the obvious solutions to Britain’s Brexit problems, which were caused by the decision to exit those arrangements. 

This week, there was a Westminster Hall debate after a public petition to hold a judicial-led public inquiry into Brexit received more than 192,000 signatures. 

The debate was lively, and the transcript is worth reading, but it was also dispiritingly familiar as Remain-voting MPs often angrily (and correctly) enumerated the damage that Brexit has done to business, trade, investment and cultural exchanges.

But the one Brexiter to show up — the Gravesham MP Adam Holloway — put his finger on the problem with such debates or inquiries: “In reality, we are arguing today about whether we should have voted to leave the EU or whether we should rejoin.”

Re-litigating the rights and wrongs of leave via a public inquiry would — as even the passionately pro-EU Labour MP Stella Creasy observed — be a very long and expensive way to tell us things that we already know.

Political books by Anthony Seldon and Tim Shipman; a mountain of select committee reports and business lobby group membership surveys, all testify to the consequences of Brexit. As Creasy put it: “I have no desire to rerun 2016, when the damage in 2023 is so apparent.”

The challenge is how to move beyond that backwards-looking blame game when the politics still paralyses the wider public discussion on Brexit.

The BBC’s report of the Westminster Hall debate spoke quietly to the problem: “Some economists believe Brexit has had a negative effect on the UK economy,” the BBC wrote “but others argue the benefits of leaving the EU will be seen over time.” 

The truth is that the overwhelming majority of economists — and indeed the data — see Brexit having a “negative effect” on the economy, and very few see Brexit having a net positive benefit over time. 

But the politics of Brexit — and the BBC is truly caught in the crossfire here — demands a kind of empty even-handedness that anaesthetises a serious debate about the trade-offs Brexit has presented, and the benefits that a different approach might bring: to trade, to investment, jobs and UK productivity.

But, for now, neither party is prepared to make the political sell about the benefits that a genuinely improved Brexit arrangement would bring. The Conservatives don’t want a public inquiry for obvious reasons, but neither does Labour. 

Instead, Stephen Doughty, a shadow Foreign Office minister, told the debate that the focus must be on “bringing people together and looking forward, rather than dividing them once again by looking back”.

What would that mean in practice if Labour won power in 2024? Well, in Doughty’s words: “We would completely change the tone and tenor of our relationship with the EU and form the basis for an ambitious partnership based on common interests and mutual respect — clear about our position outside the EU but optimistic about what we can do together in a critical strategic partnership.”

So not much is the truth. When it comes to remedying the barriers created by Brexit, “tone and tenor” isn’t going to change all that much if your red lines preclude single market and customs union membership. 

If this is the case, then the more pressing question — as this rather brilliant letter to the Financial Times last week from NIESR fellow Paul Mortimer-Lee observes — is whether the UK can find remedies closer to home for what ails its economy. 

The “true disaster” is that the Brexit debate, which has political obfuscation at its heart, stops this from happening.

Brexit in numbers

This week’s chart comes via the British Election Study and Jane Green, professor of political science at Nuffield College, University of Oxford, who recently appeared on an FT Live panel looking ahead to the 2024 election.

Work by Green and her colleagues tracks how Brexit accelerated a profound realignment in British politics. Leavers “sorted” into the Conservative party — its voters are now older and have lower levels of education — while Remainers coalesced around the Labour party, with its voters now younger and having higher levels of education.

The chart shows the stickiness of the relationship between Brexit preference (on how you voted in 2016) and support for Conservative and Labour parties, and how the pattern of that support has persisted over time.

So as a briefing to the House of Commons observed in March last year, while Brexit is no longer uppermost in the minds of voters, “its fingerprints may remain” on the coalition of voters that back each party, which may help to explain Labour’s overall position on the issue.

“All else being equal,” the briefing concludes, “the realignment is likely to remain very important by 2024-25.”

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