Monday 13 December 2021

It’s the economy stupid

The Sunday Times carried an extensive report (£) about Johnson’s recent and what seems like growing travails. It is a very long piece by Tim Shipman, known to have good links with Downing Street and it paints a very bleak picture of the swirling controversies surrounding the prime minister. It is all totally believable and gives the impression of an utterly chaotic government, exactly as you might have predicted one led by Boris Johnson would be.

Shipman's piece is several thousand words long but the word Brexit occurs just four times and mentioned in passing as a reference to time

This is, in my opinion, like an account of the events on The Titanic in the hours between striking the iceberg and sinking, without anyone mentioning the huge hole below the waterline and the tonnes of sea water filling up the compartments below deck. All the chatter is about who might replace the captain and restore normality.

Shipman writes about the Xmas party and adds yet more unwanted detail (they were all “rat-a***d" apparently). He deals with the attempted cover up afterwards, the Lord Geidt affair, the North Shropshire by election and the manoeuvres of rivals lining up leadership challenges, of which he numbers five or six including Matt Hancock and Liz Truss (don't laugh it could happen). He talks of the 'levelling up' white paper and a first draft being sent back due to a lack of big ideas:

"... insiders say the planned big “relaunch” moment in the new year, a white paper on levelling up written by Gove and Andy Haldane, a former Bank of England chief economist, has been sent back since it has little in the way of eye-catching policy. “What they have come up with is a load of blue skies theoretical w***,” said one who has read the paper."

Unhappiness in the ranks is widespread and growing. Even friends are exasperated with him.  Many are expected to rebel on Tuesday against plans for more restrictions against the omicron variant of coronavirus. 

Steve Baker, who ranks not far below Nigel Farage in the sheer amount of damage he has inflicted on this country, is pushing for the scrapping of these new restrictions, which are likely to go through with Labour support on Tuesday. Something that will enrage Baker.

Yet not a whisper by Shipman about the policy which is daily doing immense damage to the British economy. One is tempted to recall the phrase coined by James Carville (known as the ragin’ Cagun) as a member of Bill Clinton’s successful 1992 campaign: Its the economy stupid.

Next year is not about to herald a bright new dawn for this country. It will usher in a range of new import controls and force exporters to make declarations for all goods leaving our shores. Trade was badly impacted in 2021 with a border regime where imports were simply waived through. That all comes to an end in a little under three weeks time. The majority of small businesses are totally unprepared.

This is only going to increase the economic damage from Brexit and it will become even more noticeable as time goes on. Permitting Xmas parties in Downing Street is an extremely minor offence compared to Brexit but it's far more likely to remove him.  What a strange country we've become. 

Steve Baker was a leading advocate of leaving the single market which has seen a reduction in trade and tax revenue forcing the chancellor to raise taxes, something he is vehemently opposed to. It’s hard to overstate the incoherence of Baker’s approach. It makes no sense.

The Union

Something else the Conservative and Unionist party ought to reflect on is a new poll in Scotland. The SNP, already pretty dominant, are set to sweep the board at the next Westminster election. It appears all 59 Scottish constituencies are set to go yellow.

 And worse, support for an independent Scotland has reached 57%.

I wouldn’t necessarily see it as a foregone conclusion but Johnson, and the kind of things Shipman writes about, are clearly having an impact. You would need to be deaf and blind to think that they aren't.  Wales and perhaps even in NI may also be be changing their minds about the union.

Who would want to be Welsh or Scottish and governed by an amoral Old Etonian idiot, leading a populist English nationalist party?

 And finally, back to the economy.  A tweet from trade expert David Henig:

We had privileged (lower cost) access to the richest 500 million consumer market in the world. Now we are on our own. Henig adds:

"Companies from over 30 European countries have better access to the EU single market than we do. Once we get further away, at best we'll have equal access to e.g. Singapore, Australia, but in most cases e.g. China, US others have better access. So why invest here?

"Sure we get inward investment for companies servicing UK market, but much of that is profit taking such as utilities. The other major exception seems to be fintech, which can come off the back of UK strength, and where direct export isn't necessarily the model.

"Major international investors are also used to having governments committed to removing trade barriers to gain their business, whereas since 2016 the UK government has either been committed to the opposite or made it a 3rd order priority to sovereignty. Which is similar.

"The economic drag of political decisions with regard to the EU in particular is going to become more obvious. But likely potential PMs of both Conservative and Labour will want to largely ignore this fundamental. Hence the investment will likely stay suppressed."

It's the economy stupid. Make a note of it.