Rishi Sunak – the Basil Fawlty Chancellor

Don’t mention Brexit

Magnificent achievement. The Chancellor of the Exchequer manages in his Budget statement not to mention Brexit once. And yet whilst the virus is certainly an economically lethal shortish term hit on the economy Brexit is a growing and disastrous very long term malignancy. And probably an incurable one.

There is no aspect of our economic and financial health that the cancer of Brexit isn’t eating away at. Manufacturing, financial services, hospitality, the Arts – virtually every sector is taking a hit. The physical necessities of moving goods into and out of the U.K. is hampered by bureaucracy and regulation replacing free movement. The recruitment of people at all levels from surgeons to fruit pickers is frustrated by immigration rules uniquely restrictive.

Financial Services, once a jewel in our crown, is taking a huge hit as companies move to less restrictive and more welcoming locations. Amsterdam has already overtaken London in some areas, other cities will follow. In modern times there is no precedent for the isolation that Brexit creates. “Global Britain” is the antithesis of the reality.

A modern economy to be successful has to be open and flexible. Adam Smith centuries ago helped us understand the workings of Land, Labour, Capital and Enterprise. Economic groupings, of which the EU is by far the most important and successful, free up the factors of production and optimise them across borders. The Single Market and the Customs Union backed by the four freedoms unquestionably did that. Britain walked away and we can already see the costs of that foolishness.

Like many malignancies only a radical intervention will make a difference. But a Government that doesn’t even mention Brexit in its annual budget is unlikely to have any plans to ameliorate its effects. Only deep-seated prejudice could have forced Britain voluntarily into a situation where we have abandoned the single market – serious European economies, like Switzerland, have not done that despite being outside the EU.

Britain “contra mundom” will be a sad place. The delusion that being outside the EU improves our prospects with the rest of the world is offensive in its mendacity. The nonsense of the “Anglosphere” rumbles on in some quarters but being an island alone hardly improves our bargaining power and the old Dominions aren’t exactly queuing up to help.

Britain will need to restructure its economy to cope with Brexit – that means cope with it being smaller. A smaller economy means one with reduced taxation and reduced public services. You can’t run a world class health service or education system on hot air. When interest rates start to creep up again, as they will, deficit financing will become less attractive. Lower taxes and increased borrowing costs are a long term consequence of Brexit.

Government statements are often more revealing for what they don’t say than what they do. Rishi Sunak is a Basil Fawlty Chancellor – “Don’t mention Brexit” is his “Don’t mention the War”. He won’t get away with it for long surely ?

4 thoughts on “Rishi Sunak – the Basil Fawlty Chancellor

  1. Excellent piece Paddy and an accurate description of Britains future.
    Sunak actually lied yesterday to the Commons in his budget speech. He said ‘now that the UK was freed from the restrictions of EU membership he was going to create 8 free-ports around the country’.
    That statement was not true. Britain actually had 4 free-ports which were abolished in 2012 by David Cameron. They did not produce prosperity then and they won’t now. Free-ports may be a good idea in theory but they encourage money laundering, tax evasion and drug trafficking.
    The EU actually has 80 free-ports named free-zones that are subject to state aid rules. That may be the hidden message here that the UK intends in the future to prop-up ailing companies.
    When politicians make untrue statements their credibility gets weakened. The media are allowing him to get away with what is blatantly an untrue statement and an unjustified attack on the EU.
    Sunak who is an avid anti-European has just reduced his standing as a potential statesman in many peoples eyes. Not least hard-line Tories who detest tax hikes of any flavour.

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  2. Yes, I noticed there was zero mention of the ‘B’ word too. And not from a negative impact point of view, which could only be expected. But also from a positive one. Where was the boon to the British economy from Brexit? Not just now, but even in the medium to long term future? None mentioned.

    You’d think that just as a company’s share price would go up on the merest hint of good news such as the takeover of a rival, being taken over by said rival or merging with them, we’d see the boost from increased investment and confidence. Instead, what we have is a government and its apologists hiding behind the effects of Covid19 and still claiming ”we’ll cope”, ”we’re just having teething issues” and ”the worst predicted by Remainers has not happened” (even though this was only avoided as a result of swerving a no-deal Brexit).

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  3. The EU has now withdrawn ratification of the trade deal due to Frost & Johnson breaking international agreements over NI. The DUP are now threatening the Good Friday agreement. If ratification fails then its trade on WTO terms.
    So much for ‘fantastic opportunity’.

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