Ever since the end of the second world war, British governments of both major parties have aimed, in their own way, to improve the standard of living of the people. This apology for a Tory government, headed by Boris Johnson, is the first to make it an object of economic policy to make the country poorer.
But before we get into the almighty cock-up that is Brexit, let us at least welcome the good news about the victory of president-elect Joseph Biden, and the apparent breakthrough in the search for an effective vaccine to fight Covid-19.
Not only is Biden an internationalist with a benign outlook on the possibilities for cooperation between nations, as opposed to the deliberate stirring up of beggar-my-neighbour policies under Trump; suddenly, instead of going on about his advanced age, commentators have begun to focus on his wealth of experience – indeed, on his wisdom.
Evidently the malign Trump and the once-great party he has colonised are determined to stir up as much trouble as they can. But the prospective president will have considerable freedom of action when it comes to foreign and security policy.
In the sphere of economic policy, our own National Institute of Economic and Social Research recently pointed out that shocks to the system can have a perceptible impact in lowering an economy’s long-term growth path. This happened after the Spanish flu epidemic of 1918-20 and after the banking crisis of 2007-09. In the UK’s case, the impact of the latter was compounded by the policies of austerity – policies that are now widely acknowledged to have been not only harmful but also misconceived.
Few economists or political analysts look back on 1920s policies as beacons of economic enlightenment. In the UK’s case, the return to the gold standard in 1925 was an unmitigated disaster which the chancellor at the time, one Winston Churchill, regretted for the rest of his life. And we don’t need to go into what punitive economic policies contributed to the conditions that led to the rise of Hitler.
Everyone could see from the reaction of the stock market last week how important for its potential effects in reviving the economy was the news about the vaccine. There is also every sign from the advice of most economic analysts, not least the once austerity-obsessed International Monetary Fund, that economic recovery from the lockdown-imposed slump must be nurtured by fiscal and monetary policy, not prematurely halted in its tracks.
However, the importance of this analysis seems to have passed the Brexiters by. And the unfortunate thing for this country is that its government is in the grip of fanatical Brexiters, impervious to the weight of economic analysis: before we started on leaving the single market and customs union, output in this economy was already running some 20% below what might have been expected if pre-austerity trends had continued. The hit to our economy from leaving the single market is some 4% – a calculation taken from the average of a number of authoritative studies – and half as much again if we leave without a deal.
The evidence is mounting of impending chaos at the docks, disruption to supply lines and shortages of goodness knows what essential goods. The fact is that it has not got across to the evangelical dunderheads in the cabinet that the British economy is, in effect, a region of the wider European economy that resulted from the championship of the single market by their heroine, Margaret Thatcher.
It is a time for dark humour. I fear I could not help laughing when I learned from the Financial Times that No 10 has set up a unit to attract foreign investment. It was our membership of the single market that was the great attraction for the Japanese investment that did so much for the British economy and jobs from the 1980s onwards.
The Office for National Statistics calculates that foreign-owned businesses accounted for more than half our exports between 2016 and 2018. But overseas investment, according to a London University study, is due to fall by a third after we leave the single market and customs union.
Never mind: No 10, where chaos seems to be rampant, is planning to attract such investment to “global Britain”. It is not quite clear how.
No wonder that the UK’s chief negotiator with the EU, Lord Frost, has been reduced to writing to the Times telling the world about what he regards as one of the funniest books he has ever read. I agree: Three Men in a Boat is great relaxation from the horrors of Brexit. But when Frost singles out the three men’s failure to open a tin of pineapple without a tin opener, I think he is trying to tell us something. Eventually the three throw the tin, unopened, into the Thames. Frost must realise that he and his entourage are in the process of selling this country down the river.
