Firing the Starting Gun on Brexit

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“One of the biggest obstacles to my voting to leave the EU was a life spent alongside people experiencing poverty.”

This article was commissioned and an abbreviated version appeared in the print edition of the Evening Telegraph: 27/01/2020 Available: https://www.eveningtelegraph.co.uk/fp/ewan-gurr-time-for-the-uk-to-take-its-place-on-world-stage-again/  [Accessed: 2020, Jan 28] 

The EU Withdrawal Agreement Act was signed into law last Thursday and on Friday we fire the starting gun on the transition period which signals the beginning of our exit from the European Union. This effectively brings to an end three and a half years of democratic defiance and political paralysis and I personally believe that Brexit, rather than being like a bullet in the temple, will be more of a shot in the arm to stimulate our democratic process, economic trade and international networks.

For the purpose of transparency, I live in Dundee, on the beautiful north-east coast of Scotland, and voted to leave the EU in 2016 against an avalanche of cataclysmic prophecies that would make a Pentecostal preacher proud. A political centrist, I lean economically to the right and socially to the left but am not party-affiliated. I never have, and am very unlikely ever to, put my cross next to the Conservatives and found myself alongside some in 2016, whose policies I consistently campaign against.

Sensing a shift on the political seashore six months ago, I decided to carry out an impartial economic analysis on an international, national and local level by collating every positive or negative report, article and peer-reviewed journal, on the economic prospectus for the United Kingdom once we leave. Having surveyed the material, I came to the same conclusion as in 2016, that there will be an economic shock but one which a relatively steady economy can comfortably absorb and later thrive from.

Having re-read the material, it is clear we were in a bad place a few months ago. The aforementioned political paralysis was obstructing the parliamentary process and strangulating economic growth as the public began to doubt the integrity of the democratic process. I cannot tell you how many I had to try and convince to vote, regardless of their political persuasion, before the General Election and I believe there is still a blood-soaked tourniquet wrapped around the notion of democracy.

It was also disheartening to see how many bottles crashed and waters failed, even amongst some of the most virulent campaigners, as the faith we would actually ever leave became faint. And despite Angela Merkel’s recent claim that “Brexit is a wake-up call”, there has been no Damascene-esque self-reflection amongst eurocrats, who only amplified pronouncements of an EU army, the accession of nations like North Macedonia and Albania and the introduction of more eye-watering regulations.

Some have said you cannot put a price on democracy but democracy will not feed my kids or keep my wife and I warm at night if our world implodes so, in this article, I analyse from a personal perspective the international context and the opportunities ahead for a globally-focused and free-trading nation. I consider the national picture and our economic position alongside our European neighbours. And, lastly, I observe the local landscape where Brexit is expected to make a lasting material difference.

The International Context: Forging New Relationships

International trade has been one of the major areas in which the United Kingdom has historically been bound by EU regulations. The last week has been an indication of what we can expect going forward, so let me download some important highlights. Firstly, Alok Sharma, the Secretary of State for International Development, revealed in The Daily Telegraph on Wednesday 15 January that London would host African leaders in an effort to “further investment and trade between African and the UK.”

At the UK-Africa Investment Summit last Monday, Prime Minister Boris Johnson attended and set out his ambitions for a “global Britain” and for post-Brexit trade with African nations, saying: “We are not just a great friend and reliable ally but also the people you should be doing business with.” With a specific emphasis on the potential created by Brexit in terms of rolling back trade barriers, the Prime Minister added that the UK is “also the partner of today, tomorrow and decades to come.”

This was an important shift from the colonial racism that has constricted trading relationships with Commonwealth nations we cut off by joining the European Economic Community (EEC) in 1973. Charles de Gaulle, the French President between 1959 and 1969, vetoed UK entry to the EEC in 1963 because we refused to “renounce all Commonwealth preferences”. By welding ourselves to the EU, we lamentably impoverished developing nations we previously traded with for centuries.

Secondly, in contrast to the contraction of the eurozone, the global economy has just seen an upswing as the United States signed new trade deals with Canada, China and Mexico. A day later, at the World Economic Forum in Davos, US President Donald Trump said: “We look forward to negotiating a new deal with the United Kingdom” adding that Boris Johnson is keen to open talks. A fifth of our current trade is with the US but now we can forge a free trade deal with the world’s biggest economy.

The President spoke very warmly of Boris Johnson at the Forum, saying: “They have a wonderful new Prime Minister who wants to make a deal.” In a recent conversation with Brendan O’Neill, economist Liam Halligan said: “How mad is it that we, the United Kingdom, have never cut a trade deal with the United States despite 60 years of trying under the EU?” He added: “Yet we don’t have a trade deal with our single biggest country trading partner [but by] acting alone we can cut that trade deal.”

Thirdly, it is also important to note the extent of trade relationships the UK has already forged since the vote in 2016. Currently, the UK has signed 20 “continuity deals” covering over 50 countries, which includes Switzerland, Norway, Iceland and Central American as well as Eastern and Southern African nations amongst a throng of others. Incredibly, this accounts for over half of the number of trade deals the European Union has and has been achieved in less than four years.

The National Context: A Resilient Economy

Remarkably, it was announced with some surprise in April 2019 that the UK, for the first time in 10 years, had nudged USA out of the number one spot for inward investment. Despite over-stated economic uncertainty, inward investment to the UK has remained steady. In The Daily Telegraph in September 2019, economist Liam Halligan wrote: “[For] all the political drama… the UK still attracts serious overseas cash – with a stock of inward investment exceeding France and Germany combined.”

In July, 2019, The Confederation of British Industry (CBI) released a sobering report projecting the impact of Brexit upon the UK economy. It was all the more surprising then when, following the Conservative election win in December 2019, they threw their support behind Boris Johnson’s commitment to leave with or without a deal by December 2020. Director-general Carolyn Fairbairn said: “Business has had enough of uncertainty and shares the Prime Minister’s ambition for a fast EU trade deal.”

In the fortnight following the Conservative election victory, nationwide reports showed growth as if an economic dam had burst. On December 19, The Herald reported: “The Scottish economy returned to growth in the third quarter…” On December 23, Financial Times reported: “Negative-yield debt pile shrinks by $6tn as recession fears ease.” And on December 26 and 29 respectively, The Daily Telegraph reported: “GDP to rise…” and “£4bn wave of cash for stocks since election”.

It is also hard to ignore the economic complexion of our European neighbours given how restricted international trade relationships are by European Union regulations. So, let’s have a look at the three biggest players at the banqueting table: Germany experienced two quarters of deceleration and is now in recession, France has undergone several months of stagnation but just chalked up a quarter of growth and Italy is still in recession but has just had its first quarter of growth.

Once the UK leaves, these nations will be the three biggest net contributors and are in a full-blown fiscal crisis but, unlike the UK, they have limited control to make changes that might prevent it because they are welded to the eurozone and sit under the governance of the European Central Bank (ECB). This prevents them from setting their own monetary policy, interest rates and using their unique currencies as well as limiting their ability to depreciate inflation and resist further integration.

There was one fascinating contrast in October 2019 when the value of sterling experienced its biggest growth rate since 1985, gaining 6 per cent against the dollar and 5 per cent against the euro. In the same week, the President of the ECB called for “further [economic] integration” and “a common eurozone budget” a fortnight before the eurozone added €20 billion of debt to its economy per month to stem the tide of deceleration, despite being completely illegal under Article 125 of the EU Treaty.

The Local Context: Cost of Living

It was announced at the beginning of January 2020, that the first post-Brexit budget would take place on March 11 with Chancellor Sajid Javid promising a spending spree to support parts of the country that had been left behind. Exchequer Secretary to the Treasury and MP for Middlesbrough South and East Cleveland, Simon Clarke, hinted heavily at large-scale infrastructure investment in the North of England, describing their vote for the Conservatives as “a debt to the people that must be repaid.”

Clarke pointed to raising the national living wage to £8.72 and cutting tax on NI as evidence of cost-cutting measures. He said: “We are leaving the decade of austerity behind.” Fortunately, the supermarket price war has prevented rocketing food prices and fuel prices are relatively stable but, unfortunately, the national living wage still sits well below the real living wage and none of these pledges address the lamentable flagship welfare policy of Universal Credit, which underpins record UK foodbank use.

One of the biggest obstacles to my voting to leave the EU was a career spent working alongside people experiencing poverty and the fear I may be voting for greater levels of poverty. In August 2019, the UK Government’s worst-case scenario planning in the event of a no deal Brexit, entitled Operational Yellowhammer, was leaked to the press. It emphasised concern that disruption to food supplies and potential energy price increases will mean “low income groups will be disproportionately affected.”

I have been at the coalface of the “austerity” Clarke refers to. One meeting that most moved me was with a middle-class mum so malnourished she could not breastfeed her six-week old son. I, therefore, read the document deeply but felt it projected the same devastation those on low incomes already experience. In doing so, it also conveniently erased from history the “decade of austerity” which the EU did nothing to insulate us from, nor provided us with the economic resilience to ease or end.

The argument that the EU is some kind of economic safety net is a red herring. 1973 was a low point for the UK with the three-day week, regular power cuts and double-digit inflation and joining the EEC made sense. However, we joined as the oil crisis occurred and brought to an end the economic boom in Europe. During our tenure as an EU member, we have had four recessions – more than at any other point in our entire history – and these have had a devastating impact on low income families.

Before the original leaving date in March 2019, I went to Scotland’s busiest foodbank to test the theory that those on the lowest incomes voted to leave and find out if they were concerned about projected price rises. What fascinated me was that all bar one of the people I met voted to leave. Steve, 47, recently made redundant from Tokheim, told me: “I do worry prices will rise but I also believe we make better decisions when we own the decision-making process and, in the long run, I think we will be fine.”

Conclusion

In June 2016, I confidently voted to leave. Though I saw merit in the EU, I just felt there were just more reasons to nudge me over to the leave side. I would, therefore, have considered myself a sort of 52 per cent leave and 48 per cent remain voter. As time has elapsed, however, rather than backsliding, regressing and renouncing the reasons I voted to leave, I have seen the emergence of an EU complexion which concerns me and would now consider myself nearer a 60/40 ratio for leave.

The current picture is very clear: The economy of the eurozone is contracting and in a process of terminal decline while the UK economy has maintained slow but steady growth since the vote to leave. Only a third of EU nations are net contributors and the top third – minus the UK – are in a perilous economic state. The trajectory leans towards further integration, tighter bureaucracy, higher contributions and stricter regulation. What nation in their right mind would want to weld themselves to this?

What has become alarmingly clear since our vote to leave the European Union in 2016 is that the economic girth of the EU has shrivelled to a stump and is half what it was when we joined in 1973. If ever there was a time to cut the last thread of the rope attaching our life raft to the sinking ship of the European Union, throw off the international shackles, economic introspection and colonial racism that has stunted our potential for growth and, once again, take our place on the world stage, it is now.

 

 

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