Jim Power: Lessons for Ireland in Britain's Brexit debacle
Pro-Brexit supporters gather in George Square, Glasgow, on January 31, 2020. Picture: Andrew Milligan/PA Wire
Suffice to say the third anniversary of Brexit was a low-key affair, and was not celebrated in an obvious way in Britain.
The reality is that the fateful decision to walk away from free access to an EU market with a population of close to 450m has not worked out. The many freedoms and benefits promised by its ideologically-blinded proponents have not materialised, not least the financial bounty for the National Health Service, which is not having a good winter, to put it mildly.
There should be no surprises about the decision to push ahead with a project that never made economic nor business sense. The only question was going to be the magnitude and extent of the damage that Brexit would inflict on the UK economy. Of course, not all ills can be blamed on Brexit, but is has certainly contributed significantly.
The IMF downgraded its global growth forecast on three occasions last year, but coincidentally last week it broke the trend and upgraded its world growth forecast for 2023. It forecasts the US will grow by 1.4% in 2023; the eurozone is expected to expand by 0.7%; and China is expected to grow by 5.2%.
In contrast, the UK is the only G7 economy the IMF projects will contract next year, with GDP set to fall there by 0.6%. Even the Russian economy will grow by 0.3%, according to the IMF. This is not a good look for the UK.
The Brexit campaign and debate demonstrated the dysfunctional nature of the UK political system, a dysfunction that has been magnified in dramatic fashion since the June 2016 vote. Brexit has created a pretty poisonous political environment.
The ending of Boris Johnson’s political career, the mini-budget debacle in October that led to the sacking of Kwasi Kwarteng and the resignation of Liz Truss, the sacking of Nadhim Zahawi as chairman of the Conservative Party, and the pressure on the deputy prime minister Dominic Raab amidst allegations of bullying provide a snapshot of just how bad things are in the Tory party.
The proponents of Brexit are not prepared to admit that it was a mistake. It is not that Brexit has not been done properly, but that in principle it is a mistake. Unfortunately, the British Labour Party does not have the bottle to address the issue and is afraid to do or say anything that might be deemed an attempt to reverse the process.
Before Brexit, the UK was in a fundamentally weak place due to a lack of investment over decades. Rising inequality, low median household incomes, and a basic lack of sustained economic growth made matters worse.
The UK headline inflation rate is running at 10.5% and the Bank of England is increasing interest rates aggressively, with the 10th successive rate increase delivered last week, and compounding the cost-of-living pressures on an incredibly unequal society.
Data from the Nationwide Building Society showed that house prices fell in January for the fifth consecutive month, reflecting rising mortgage rates, squeezed real incomes, and very weak consumer confidence. On top of this, the numbers of days lost to strikes is hitting new highs.
All these problems are proving very challenging for the British government, and Jeremy Hunt is under intense pressure to cut taxes. He does not want to do so for obvious reasons.
Britain should provide a clear template to Ireland of the damage that a lack of economic growth can do to an economy and a society, and how poor political decisions can bring a country to its knees.
