Britain is being impoverished by a Remainer institutional mind virus
We have sinned, and deserve to be punished. We voted for the Tories, and then, horror of horrors, to leave the EU: we are the 52 per cent, the guilty men and women of Brexit. We were warned, and didn’t listen: it is us who brought poverty and pay cuts upon the nation, or so the “grown-ups”, the “sensibles”, that whole useless army of “experts”, civil servants, central bankers and assorted technocrats of all parties are desperate for us to believe.
None of the myriad, debilitating maladies gnawing away at Britain’s soul apparently have anything to do with them. Rampant inflation, feeble growth, our horrendous housing crisis, productivity performance and calamitous reaction to Covid, our disastrous NHS and welfare state, and the fact that we still haven’t recovered from an avoidable financial crisis 15 years ago: it is the voters, egged on by a handful of pro-Brexit demagogues, who are truly responsible, supposedly, not the ruling class.
Pardon my sarcasm, but this self-serving, righteous cant has become too much to bear. It is the opposite of the truth, a delusional indictment of an intellectually bankrupt, wretched elite afflicted by a hopeless Remainer institutional mind virus. Overwhelmed by our national problems, they find it easier to see everything through the prism of our departure from the EU, and cannot imagine a solution to our woes that doesn’t involve rejoining. The result is a self-fulfilling prophecy: decline begets decline, and nobody is proposing any genuine reforms to return our country to prosperity.
Huw Pill, the chief economist of the Bank of England, is indicative of a buck-passing establishment that has given up. Don’t ask for high pay rises, he tells us: we are permanently worse off, and attempts at maintaining our spending power will merely entrench inflation. The Bank, which like the Office for Budget Responsibility is convinced that Brexit will leave us a lot poorer, refuses to accept that its ultra-loose monetary policy, including excessive QE after Covid, is to blame for much of our inflation. Putin’s invasion of Ukraine pushed up energy costs, of course, but overall price rises were dangerously above target long before the war.
It is true that a drop in GDP per capita should lead to a commensurate decline in wages and profits. But that isn’t really what the Bank is arguing: it is trying to blame workers and firms for the scandalous persistence of double-digit price rises, relying on facile cost-push theories of inflation, rather than accepting that it should have increased interest rates sooner. It also seems to want workers to swallow far greater real-terms pay cuts (of 4-5 per cent) than warranted by the scale of the energy shock and trajectory of GDP. One possible explanation for this is that it believes that Brexit will condemn us to long-term stagnation, so wants to get the pay cuts in early, under the cover of inflation. Down that road lies madness and, in time, a Right-wing populist or crypto-communist counter-revolution. The central issue of our times is that our ruling class has no solutions to the quasi-stagnation that has gripped our economy since 2007-8, and which is the direct result not of Brexit but of a series of blunders that culminated in the destruction of the successful Thatcherite economic model.
Yes, we would have grown a tiny bit more in the past few years in the absence of the protectionist measures imposed by Brussels after Brexit, but the overwhelming majority of our secular slowdown has nothing to do with leaving the EU. Crucially, our new-found self-governance gives future governments far greater options to reboot our competitiveness. Brexit is a meta-philosophy, a framework to decentralise decision-making. The fact that the Tories have failed to make use of enough of these rediscovered freedoms proves there is something wrong with this Government, not with Brexit.
In any case, despite Tory pusillanimity, the gains from leaving the EU are becoming clearer, in the form of policies that would have been legally or psychologically impossible to execute while part of the EU. This growing list includes the early vaccine success, Aukus, joining the Trans-Pacific Partnership (a huge moment which will automatically lead to divergence from the EU Acquis), new agricultural and fisheries policies, and forthcoming regulatory improvements in finance, tech and elsewhere. In time I’m certain that the benefits of Brexit will still easily more than outweigh its costs.
As the Special Competitive Studies Project argues, digital, physical and biotechnical technologies will shape economics and geopolitics. The think tank puts America ahead in internet platforms, synthetic biology, biopharmaceuticals, fusion energy and quantum computing; China leads the race in 5G, commercial drones and advanced batteries; and neither of the two superpowers is truly stronger than the other in Artificial Intelligence, next-generation networks, semiconductors and advanced manufacturing. The EU, needless to say, is nowhere to be seen. One hedge fund manager, Vuk Vukovic of Oraclum Capital, argues that Europe “leads” only in one “field”: regulation. The continent is finished, out of the race. How can it possibly be any sort of answer for Britain to rejoin a technocracy that keeps losing global GDP share?
Our cultural and economic elites don’t understand any of this, just as they don’t understand that lower taxes, deregulation, a larger, more competitive private sector, and greater entrepreneurship boost growth. Their models imply that only public “investment”, even higher immigration or rejoining the single market and customs union can possibly grow GDP. Their main tools to boost productivity – including hiking the minimum wage – have had no noticeable impact, despite being tested to destruction. They are obsessed with mining every piece of data to “prove” that we are doing less well than other EU countries, and thus – illogically – that Brexit was a failure. Many of these claims are wrong, as the economist Julian Jessop keeps demonstrating.
Roughly speaking, our economic performance is now the same as that of Germany, France and the wealthier EU economies: this is bad news, because 15 years ago we used to easily outperform the Eurozone, but it is no argument to rejoin. Brexit’s greatest benefit to date has been to show up our technocratic elite’s incompetence, poverty of ambition, and inability to break out of groupthink: they are just as useless as their European counterparts.
