Tuesday 6 June 2023

Brexit's sour grapes

For a project sold as the answer to Britain’s problems of low productivity, sluggish growth and stalling investment, Brexit is now being defended based on it not being quite as bad in some sectors as was forecast in 2016 by some people. You also see cases of Brexit supporters arguing that things we have lost are not worth very much anyway. We have gone from cherry-picking to sour grapes in our so far fruitless journey to Brexit.

You see examples everywhere, but I noted several in quick succession over the last few days. First came a report that Brexit has ‘killed’ the au pair industry in the UK. Now I have never been in a position where we have ever wanted or could have afforded to employ an au pair. For me and my wife, both from very working-class backgrounds, au pairs are not something that ever kept us awake at night.

However, quite a few responses on social media were of the eye-rolling ‘so what’ kind, as if it didn't matter. But when the government is trying to get people, well qualified and highly paid people, back to work to help the economy, au pairs can make a difference, not to mention the au pairs themselves who get paid and spend money here as well as the agencies that organise them.

The fact that some Brexit supporters don’t use au pairs means it’s OK for everyone to manage without apparently.

Next, news of Eurostar services, including the one to Disney World near Paris, being cancelled has the Bruges Group putting out a tweet showing it can be cheaper to fly from Gatwick to Paris. Now this may be true for people without luggage who don’t mind travelling to an airport rather than city centre to the city centre and having a longer journey time overall.

But it ignores the fact that travellers now have reduced choice and less convenience but this is apparently something to celebrate.

Andrew Neil is often quite prickly if anyone suggests he’s a Brexiteer although I have never seen him criticise Brexit and normally he’s to be found defending it, which is a bit odd for someone claiming to be neutral. He tweets:

Incidentally, scrolling through his tweets you can't see a single one where he is retweeting any bad news about Brexit, although the bad outweighs the good by a factor of 20:1 at least I should think.

What he says is, I’m sure, perfectly true. The article he refers to is in CityAM and as far as I read, even the author of the piece doesn’t claim these ‘financial projects’ happened because of Brexit. In fact, the article expressly says London has held the same position for financial project investment since 1986. There isn’t the slightest suggestion that Brexit played anything other than a negative part.

And note, the table isn't for all foreign direct investment but only for the number of financial projects and we don't even get to see the actual monetary value, which I assume therefore is quite small.

It also ignores the fact that Amsterdam has overtaken the London Stock Exchange (LSE) by shares traded and Paris is now bigger by market capitalisation. Also, the EU has given its banks and financial institutions until June 2025 to shift important operations from London to somewhere inside the bloc, putting at risk London's €660 trillion (£563 trillion) clearing market as Brussels tries to build its own “strategic autonomy.” 

The former boss of the London Stock Exchange, Xavier Rolet, warned last week that The City faces ‘perpetual decline‘ without major reform. And all Neil can do is point to one survey showing financial projects are still holding up.

As a reminder, Britain used to be a leader in shipbuilding, aviation, railways, motor cars, motorcycles, machine tools, hosiery and probably others too. Industry leaders were probably just as complacent then as Mr Neil is now

From Encyclopaedia Britannica: 

“In 1913 UK [ship]yards produced 58 per cent of world output. Germany ranked next, accounting for 14 per cent; it built very large vessels and developed the revolutionary diesel engine in 1914. The United States lost the comparative advantage it enjoyed during the heyday of sail, and henceforth its marine industries were reliant on government aid. In 1913 U.S. yards constructed just over 8 per cent of world production.”

I don't know where we are at the moment but I do know we are now just a minnow in the merchant ship-building business and nowhere in cruise liners for example. What happened?  I suspect the problems started with the entirely baseless but ‘relentless optimism’ of the kind Johnson himself was pushing yesterday in the Commons:

Until we get rid of this mindset and start to be realistic, and stop defending decline as if it's a massive success other countries will carry on overtaking us.

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