The vote to leave the EU has been widely interpreted as a cry of anguish, predominantly from the dispossessed in non-metropolitan England: white working class people, typically in the north, who feel they have been left behind by globalisation, rising inequality, casualisation and low pay.
It is a cruel irony, therefore, that it is these people, the ones at the bottom of the social heap, who stand to be worst hit by the emerging post-Brexit economy. There have been howls of anguish from financiers in the City of London, who are demanding a special deal in the EU, and, since money talks, they’ll probably get one. But the first casualties, as The Herald reported, will be low-income families caught in the vice of rising living costs and benefit cuts who stand to lose £360 a year. As we know, most of the working-age benefit claimants are actually in work and their income had already been squeezed by 10 per cent since the 2008 crash.
It’s beginning to dawn on Brexit voters that leaving the EU will be a disaster for working people. Inflation is back as a direct result of the 18 per cent devaluation of the pound since June 23. The forecast for price rises next year is three to four per cent, which doesn’t sound like much but most of this is going to be on essentials such as food, clothing, energy and transport, which will disproportionately hit those on already tight family budgets.
Meanwhile, the Guardian reported yesterday that the UK Cabinet has been presented with three independent reports (from the Treasury, the National Institute of Economic and Social Research and the London School of Economics) forecasting an average loss of 4.5 per cent of GDP by 2030. That is equivalent to a major economic recession spread over 15 years. We are talking about losing hundreds of billions of pounds in economic output if Britain is forced out of the EU customs union, the destination of half of Britain’s exports. We know who will pay the price of the public spending cuts that will ride on the back of this fall in national wealth.
Brexit ministers pooh-pooh this as pessimism and negativity from Bremoaners and Eurowhingers. But they’ve demonstrably failed to come up with any alternative forecasts, or indeed any coherent plan for dealing with the consequences of isolation. Intoxicated by their referendum victory, Brexiters seem to be more interested in fantasising about new Royal Yachts and inspecting the teeth of migrant children.
Environment Minister Andrea Leadsom did her bit by promising that good old British tea and jam would take the place of all that stuff we send to Europe; as if groceries could replace high-end engineering and financial services. Britain is being led by a Dad’s Army of hopeless Brexit romantics who think they can return to the days of Empire, when compliant colonial countries would buy our manufactured goods and send back cheap produce and raw materials. It’s not like that any more. You have to cultivate your markets, keep your friends close and your trading rivals closer.
Yet Britain has opted out of the world’s largest customs union, encompassing 500 million of the wealthiest consumers in the world. There is an alarming sense of drift in the May Cabinet as ministers jostle for control of the sinking ship. Hard liners, led by Brexit Secretary David Davis, International Trade Secretary Liam Fox and Foreign Secretary Boris Johnson, have tried to disguise their cluelessness by reducing the argument to immigration, as if that were the only issue that matters. Brexiters have assumed that working class people who voted to leave the EU were interested only in keeping foreigners out. We now know this was far from the case. Opinion polls have demonstrated that some two-thirds of voters believe economics and free trade are more important than immigration.
It’s the economy, stupid. English working class voters are not all slavering racists and have a better understanding of the economics of the real world than Tory backbench financiers. Being as remote from the lives of working people as any Bourbon monarch before the French Revolution, the Brexit bunch assume the portrayal of working class attitudes in tabloid newspapers is true to life. It is not.
Public attitudes are changing as people realise how threadbare the Brexit case is; not just the nonsense claims of saving £350 million a week for the NHS but the entire project for “independent Britain”, a bogus sovereignty never lost on the EU. The oft-repeated lines that the rest of the planet is just waiting to buy our exports in unprecedented volumes, and that the Germans will offer a deal on trade so that they can still sell us their cars, is wearing thin. Treasury estimates make clear that trade with the rest of the world would have to increase by 37 per cent to compensate for the blockage of exports to Europe. In Scotland, there is mounting concern as it becomes clear that our anaemic economy is in no shape to suffer a Brexit squeeze.
For most of the early years of the Scottish Parliament, spending rose annually by a comfortable margin due to the Barnett Formula, which linked spending in Scotland to rises in UK departmental budgets. But, as Barnett is phased out and more revenue is raised by Holyrood through its new income tax powers, a very large hole is beginning to appear in the accounts.
Our economy has depended on migrant workers to boost our dwindling population of working age Scots. If this is cut off, at the same time as World Trade Organisation tariffs of 10 per cent are slapped on Scottish exports to Europe, the impact on the Scottish tax base will be severe. There will be too few workers paying taxes adequately to finance our public services, especially as Holyrood takes on welfare spending. The UK Government is deluding itself if it thinks it can leave Scotland to its own devices because the Scots have nowhere to go. Mrs May would be wise to listen to Nicola Sturgeon’s plea for special arrangements on trade and immigration for Scotland.
The news will only get worse as we approach Article 50. Mrs May will almost certainly have to give Parliament a vote and that means she can no longer conceal the confusion and division in her Cabinet. The full extent of ministerial disarray and lack of planning is about to become public knowledge. The case for leaving the single market was always thin, but it has come apart in spectacular fashion as the Brexit boom has turned to bust.
David Cameron’s Government agreed as long ago as 2010 that, “because of the sovereignty of Parliament, referendums cannot be legally binding and are therefore advisory”. This was in evidence to a House of Lords Committee. This is devastating news for the Prime Minister, who’s been trying to push through Article 50 on the back of pre-democratic powers of Royal Prerogative, just at the moment when public attitudes are changing and Brexit is turning into Regrexit.