Categories: Economic News

Is Brexit to blame for the UK’s economic and political turmoil?

Britain has been the subject of international ridicule in recent months.

In September, after Prime Minister Boris Johnson was forced out, a new government unveiled a mini-budget that included deep tax cuts to be paid by borrowing billions. This caused bond yields to rise, the pound to sink, and destroyed the country’s reputation for fiscal prudence. The resignation of the new prime minister, Liz Truss, after just six weeks in office, and the arrival of the fourth finance chief in as many months, created an impression of political chaos.

Britain, some outside observers said, had become an emerging market, even a banana republic. But why has a country, traditionally known for its stability, been surrounded by so much turmoil?

Brexit is the reason, according to critics of the United Kingdom’s departure from the European Union.

“I call it ‘Britastrophe’,” said business consultant, author, musician and anti-Brexit campaigner Peter Cook. “Brexit has been a disaster and COVID has been a crisis. If you put a crisis and a disaster together, you get a catastrophe. ‘Britastrophe’ has divided and weakened the country politically and economically.”

“The UK will rejoin the bloc eventually. It’s almost inevitable,” says business consultant, musician and anti-Brexit campaigner Peter Cook. (Miss Beard)

Since the referendum vote to leave the EU more than six years ago, Cook has fought a long campaign to reverse that decision, composing and recording more than 60 anti-Brexit songs with titles such as “Bad Brexit Boogie”. He doesn’t think he’s been losing his breath, especially after the mini-budget fiasco.

“The UK will rejoin the bloc eventually,” he said. It is almost inevitable because Brexit has consumed four prime ministers so far and is consuming our economy.”

Brexit, he said, affected international confidence in the UK and damaged the country’s credibility.

“People laugh at us a lot now, or a lot of them take pity on us and say: ‘What have you done?’ and ‘Why?'” Cook said.

The bloc’s exit, Cook said, has caused particularly deep divisions in the ruling Conservative party, ultimately leading to the mini-budget debacle that nearly crashed the economy. He blames Brexit for many of the UK’s economic ills.

“Our lack of resilience due to Brexit is the underlying factor. We are no longer able to absorb the shocks.”

Mark Carney, former governor of the Bank of England, would agree. In an interview with the BBC, Carney said that Brexit had driven down the value of the pound even before the mini-budget, and that had pushed up inflation, forcing the central bank to raise interest rates to the highest levels in which would have been the case. Brexit, he argued, had slowed the rate at which the UK economy can grow.

Trade in the UK also appears to have been affected. According to a recent study, UK exports and imports to and from the EU today appear to be lower than they would have been if the UK had been a member.

Darren Price, who helps run British Boxers, a small family-run clothing business, believes this is an accurate assessment of the disruptive effects of Brexit. He encountered a lot more paperwork and complications to deal with the blog.

“Any company like ours that operates across Europe has increased costs and therefore decreased profitability. And it makes it harder to operate,” he said.

Price hated Brexit, but he doesn’t believe that after all the trauma of leaving, the UK will rejoin the bloc. However, he said one part of it should and probably will be incorporated again: the EU regulatory system, the single market.

“I think a closer relationship with Europe is absolutely essential,” he said.

Ardent Brexiteers, of course, take the opposite view. We caught up with one of them hard at work in a storage depot in London. Gawain Towler was offloading a shipment of books, posters, leaflets and other exhibits for a planned Brexit Museum.

Gawain Towler, offloading exhibits for a Brexit Museum, says anti-Brexits want to blame Brexit for “all our problems”. (Miss Beard)

“We are bringing together a whole range of documents and artefacts which will tell the story of how the UK took the momentous decision to leave the EU,” he said. “What we hope to do is ensure that there is a memory, an institutional and academic memory of why it happened.”

It happened, Towler said, because the British people decided they wanted to become a fully independent nation again. It has been marked about the recent increase in complaints from “residents”.

“They are raising a rather monotonous drone: ‘Brexit will never succeed, Brexit will always fail, Brexit is to blame for everything, for all our problems’.”

The pandemic and the invasion of Ukraine are the main sources of Britain’s current problems, he said, not Brexit. And anyway, he said, the UK is not much worse off economically than many of its international competitors. And in some respects it is doing a little better: its inflation rate is lower than the eurozone average, interest rates are higher in the United States, and the government’s debt-to-GDP ratio of the United Kingdom is the second lowest in the G7. .

The UK has many problems, including low productivity compared to many other developed economies. But Towler insisted he was never under the illusion that leaving the EU would provide instant Nirvana.

“Brexit was never going to cure all our ills overnight,” he said. “Of course he wasn’t. And you’d be crazy to think he was.”

However, many Brexiteers, especially in the business world, are deeply critical of the way the British government has handled the UK’s exit from the bloc.

“Am I sad that we have left the EU? No,” said Steve Hardeman, head of rivet manufacturer Clevedon Fasteners in the English Midlands. “But am I very, very disappointed with the political class? Yes, I am.”

Hardeman, a passionate believer in the potential of British manufacturing, describes himself as a “daunted Brexiteer”. He blames the two Conservative governments that followed the referendum for failing to get a good exit deal with the EU and for failing to take advantage of the opportunities offered by Brexit, significantly reducing regulation and boosting global trade. He is also dismayed by the mini-budget of Liz Truss’s fleeting government.

“We have such poor politicians. They can’t understand the problems we face. They have no idea,” Hardeman stated.

One thing many of them and Brexiteers agree on is that the British government has been a mess in recent months. And this time, the politicians have had nowhere to hide. They can hardly blame Brussels for the post-Brexit turmoil.

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