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Project Fear? They were right all along. (Only it’s worse)

It is an extraordinary story: a kind of reverse Fake News.  Instead of people being led to believe something false, the public appear not to believe something that is actually true. Perhaps the Russians have been fiddling with out brains again. Or maybe we just have a higher tolerance for hardship when it’s self-inflicted.

At any rate, there seems to be a widespread assumption that Project Fear – the claims made before the 2016 referendum about the damage Brexit might inflict – was disproved by events. That it was all a Remaniac scare story. In fact, the forecasts made by the Treasury and others turned out to be uncharacteristically accurate.

The then Chancellor, George Osborne, forecast in 2016 that Britain would lose 6% of GDP by 2030 and that British families would be worse off by £4,300. It was of course daft to put a cash figure on the loss, but the reality is that we are already well on the way to seeing Project Fear fulfilled. The Bank of England confirmed in May that the UK had already lost 2% in predicted growth, and 4% from family incomes. This amounts to some £900 per family. And that’s in only 2 years.

Families are worse off because inflation has picked up while wages have continued to stagnate. Food price inflation is largely a result of the 15% devaluation of the pound – not far short of the collapse of the Turkish lira – which makes imports more expensive. Our wilting wages are largely a result of poor productivity, faltering inward investment and a general lack of confidence in the economy because of – well – Brexit. The UK economy has been growing – albeit slowly. The point is that it would have grown much faster had Brexit not happened. We have squandered the best years of the global economic recovery.

The current chancellor, Philip Hammond, aroused fury from the Moggists by claiming that government borrowing will have to increase by £80bn by 2033 as a result of a no deal Brexit. Even under Theresa May’s discredited Withdrawal Agreement, much of that is already locked in.  Even if we stay in the Customs Union, and bits of the single market, British trade will falter and trade in many services, 80% of the UK economy, will be stuffed.  Everyone knows this in Brussels, which is why they are happy with May’s deal – they know it will hurt.

And this weekend, as the government implodes and MPs reject May’s deal, a  no deal Brexit is not just a remote possibility; it is an imminent reality. In reality, it is what Brexit means, has always meant. There may be some kind of a deal struck in next month that covers the divorce bill and secures the rights of EU citizens in the UK, but the prospects for any kind of settled deal on future trade is vanishingly small, as the International Trade Secretary, Liam Fox, has conceded.

Tory Brexiteers don’t really want a Chequers-style deal anyway. They believe it would entangle the UK in all the rules and regulations of the European Single Market. They want to liberate chlorinated chickens and hormone-fed beef from Brussels red tape. Theresa May’s suggestion that Britain might accept rulings from the European Court of Justice, without being formally under its jurisdiction, was acceptable to Brussels. But it was a recipe for “vassalage” according to Jacob Rees Mogg.

The hard Brexiteers number only about 40 or so right wing Tory MPs, but they are within an ace of achieving their dream. This is to turn Britain into a low-cost, low-regulation, low-wage Singapore which will flood the EU with cheap exports. They think voters will accept this insecure future because they’ll be compensated in the form of cheap food from Africa and Latin America which will arrive in Britain without having to pay the tariffs charged by the EU or meet its environmental standards.

It will be a remarkable free market experiment – resembling the economic policies of 1970s Chile, but without the Junta. Few people in Britain would willingly vote for it. But we’d better suck it up because in the eyes of Brexit Tories, we already have.

About @iainmacwhirter

I'm a columnist for the Herald. Author of "Road to Referendum" and "Disunited Kingdom". Was a BBC TV and radio presenter for 25 years - "Westminster Live" and "Holyrood Live" mainly. Spent time as columnist for The Observer, Guardian, New Statesman. Former Rector of Edinburgh University. Live in Edinburgh and spend a lot of time in the French Pyrenees. Will that do?


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