Britain: the third lost decade beckons

We haven’t reached the sunlit uplands yet. In just the last week or so, the OECD has warned that Britain is heading for zero growth and the worst economic performance in the G20 after Russia, it forecasts that Britain will have the highest inflation in the G20 (apart from Russia, Turkey and Argentina), we have learned that only London and Northern Ireland have a bigger GDP than pre-pandemic levels and Bank of America has announced that sterling is taking on the characteristics of an emerging market currency, and all this at a time when Britain’s households are suffering the biggest tax take since the 1940s. Britain is not a failed state, but right now it is failing.

At the same time, few minds in Britain were discussing ideas or events: all the focus was on people. This is probably not a coincidence. Britain has had enough of ideas for the while.

What next for Britain? Well, until Britain is willing to have a proper discussion about what’s going wrong, it’s going to continue its relative decline.

In the background, the B word is hovering. I shall leave it there for the moment, shimmering in the breeze like a motheaten flag.

Many of Britain’s problems are common in the developed world at present. Labour shortages in key industries, the soaring cost of oil, problems with supply chains, Mercury in retrograde and so on. That doesn’t explain why Britain is suffering so acutely.

The chief underlying causes, as they have been for decades, are poor education, poor infrastructure and inadequate investment by both public and private sector in R&D. But again, why is Britain suffering, relatively, so acutely now?

At this point, Brexit cannot be avoided any longer. Britain wasn’t exactly in great shape pre-Brexit, but it was in the normal bad shape of the rest of western Europe, perhaps doing a bit better than average. Since then it has languished. Given that the hit to Britain’s economy from Brexit was predicted by almost every reputable economist before the referendum and that organisations like the OBR have confirmed that they believe that hit has happened, anyone believing otherwise is going to have to show their workings very clearly. That’s an attempt that broadly has not been made (presumably because the smarter Leavers know it’s pretty hopeless).

Then there’s the manner of Brexit. Despite what ardent Leavers would now have you believe, there were a variety of different ways in which Britain could have exited the EU. It has chosen one of the very most damaging ways, not least because it remains incomplete, the timetable for its complete implementation remains opaque and the government has chosen to seek to unpick key details.

Then, the timing has turned out to be awful. Britain’s supply chains have been disrupted by Brexit at the exact same time that they have been disrupted by Covid-19 and the war in Ukraine. This is pure bad luck, but it’s bad luck that Britain risked unnecessarily.

Finally, there’s the fact that Brexit continues to dominate such discussions. As it has for the last 6 years, it is making Britain snowblind, unable to see what else is going on, missing opportunities, missing dangers.

Given the last point, should we move on? You might think so, and the official opposition has been doing its best to do so, judging, correctly, that it would do itself no favours relitigating Brexit just now.

The government, however, has no intention of letting go. Indeed, one of the major reasons given for keeping Boris Johnson as Prime Minister was that he had delivered Brexit (as though that absolved his rule-breaking, arrogance and deceit) and there were numerous suggestions that the attacks on him were driven by what one particularly crazed commentator described as the Remainstream media, ignoring the fact that some of his fiercest party critics were themselves adamantine Leavers.

No, the government sees Brexit as something foundational in its own mythology, something to be referred back to in the same manner as the crucifixion or the Glorious revolution. It has absolutely no intention of letting go.

There are a few dangers for the government in this approach. First, it campaigned at the last election to Get Brexit Done. If it is claiming that Brexit is not Done, it is inviting voters to conclude that it broke its central manifesto promise.

Secondly, just as the public don’t want to hear Labour relitigating Brexit, it’s very doubtful they want to hear the Conservatives doing so. They’re heartily sick of the whole thing.

And thirdly, the voters do not share the government’s enthusiasm for either the theory or the practice of Brexit. I wrote about this last year, and things have continued to move slowly in the direction I anticipated.

The broad consensus that Brexit is working out badly has been cemented. In the last poll I can find, from 10 May, just 17% said they thought that Brexit was going well. By 59% to 30%, the public think the government is handling Brexit badly. And in the longrunning series of YouGov polls on whether the decision to vote to leave the EU was correct, “right” has not polled as high as 40% in any poll this year and currently trails “wrong” 37% to 49%. Bit by bit, support for Brexit is slowly flaking away. This, despite the fact that no major politician is arguing the pro-EU case just now.

Some Leavers have started to notice. Right now, the Leave camp is visibly splintering into two groups: those who want to believe harder (currently led by the improbable figure of Lord Frost) and those who want to make an accommodation. Daniel Hannan was much ridiculed for his sudden declaration, years after the event, that Britain should never have left the single market. Iain Martin, also years after the event, has decided that Britain needs a better trading relationship with the EU. Both of these interventions have been derided from all sides and both seem to be motivated by neither repentance at having backed the wrong horse nor by a change of view about what Brexit should represent but by a desire to push the Brexit debate in a direction which they had always favoured.

The hardliners, however, seem to be winning. The government has been poised for months to wield a wrecking ball on the Northern Ireland protocol and now looks set to take an irrevocable step in that direction. The main effect of this will be further to poison relations between the EU and Britain, and send relations with the US into the deep freeze too for good measure. I suspect most members of the public would prefer to see the government focus on measures that help to deal with the economic crisis.

Still, the fact that both camps felt the time was opportune for their intervention tells us something is in the air. Without any encouragement from politicians, the entire Leave project as it has been promoted for years is drifting into division and disrepute. There isn’t the political capital on the Leave side to promote a version 2.0. It’s reaching a crisis point.

Since I last wrote, Labour have reaffirmed that they do not propose to renegotiate Brexit. As I said last year, this is wise at present. It is a subject where public opinion will need to lead them, not vice versa. Labour would be capable of making the case for closer links with the EU from government but not from opposition. And in any case, they would do better drawing up plans to deal with the longer standing problems I mentioned at the outset (they haven’t seemed capable of that, mind).

There’s another reason. Britain may be being hit particularly hard by the current economic crises, but the rest of Europe isn’t exactly a rose garden either. Just as Britain might warm again to the idea of buddying up with the EU, the EU member states are going to be looking to their own interests with particular zeal. After a couple of years of low growth, squeezed living standards and high inflation, do you imagine any of the European governments having any authority to be open-handed in their dealings with perfidious Albion. Centrism, even muscular centrism, looks set to be under the cosh and populism looks set to flourish still further. Given that it is starting from a high base in almost every European country (look at Marine Le Pen’s performance in France, for example), that should frighten us all.

So if the Labour leader were to look for bonhomie from the EU in a wave of post-Johnson sympathy, he would be likely to be deluding himself. At best, he might get some helpful words or some token gestures. In practice, self-interest is likely to reign supreme across the continent.

This seems as good a point as any to note that the EU has a big problem with how it deals with its neighbours generally. It is striking that it currently has a terrible relationship with all three of its biggest neighbours, Britain, Russia and Turkey. The relationship with Belarus is terrible too. Its relationship with Serbia is awkward. The western Balkan nations, Moldova and Ukraine are all looking for different relationships with the EU from their present ones, so once you exclude microstates, the only bordering countries with which it has a reasonably settled relationship are Switzerland and Norway, and even the relationship with Switzerland is perennially scratchy. Now in each case you can say there are reasons, and there are, but those reasons have usually been made worse by the EU’s behaviour.

It is messing things up right now with Ukraine and Moldova. Both are countries that are creating part of their identity around joining the EU. Many Moldovans are so keen to join the EU that their Eurovision entry this year was a paean to enosis with Romania. All the signs are that the EU is not going to rise to the moment, insistent that proper processes be followed in every last detail.

Nor is it showing any signs of forward planning about the aftermath of Russia and Ukraine. The current Russian offensive has the flavour of the German push in March 1918, scrambling to win before the imminent arrival of American materiel overwhelms them. This does not seem to be going brilliantly and soon the munitions will reach the Ukrainians in quantity. There must be a substantial chance that Russia will become very disordered in the wake of the war.

To take a tiny instance, has the EU prepared for the possibility that the Kaliningrad oblast, not so very long ago part of Germany under the name East Prussia, might become detached from a Russia in chaos? Germany has disclaimed its interest in the territory, but Poland and Lithuania have tenuous dormant claims to the land and Russia’s legal, as opposed to practical, claim to ownership of the oblast is sketchy. Whatever, the EU needs to have stand-by plans for a piece of land that’s armed to the teeth that might at some point in the future need taking care of if Russia finds that instead of exporting chaos and disorder it has imported it. There isn’t much sign that it has — and this is just one tiny piece of forward planning that might need to be thought about in the event of greater chaos in Russia.

The common Eurosceptic critique is to blame the fact that unelected Brussels bureaucrats never have to answer to the public. This is the wrong diagnosis. The problem is that elected national politicians never have to answer to the public for the decisions of Brussels bureaucrats, so they feel no great need to involve themselves in them, to stop those decisions being taken or to argue for them.

Whatever, if the EU is not going to take a visionary approach to the possibility of admitting Ukraine to the EU, it’s unlikely to want to show flexibility to the UK, whether or not that is a good idea in its own terms. Remainers and rejoiners need realism about this, as does the Labour leadership. Relations with the EU would continue to be a running sore.

So let’s return to the beginning. Britain is failing. Brexit has made its problems more acute but is neither a fundamental cause nor offering a solution to those problems. However, there is no resolution in sight for it and it will continue to command attention, as the government sees advantage in further conflict for internal party reasons while the Remain camp is unlikely even if it secures power to obtain much in the way of meaningful mitigation, given the internal dynamics of the EU that are likely to develop. Meanwhile, the longstanding underlying problems will continue to go unaddressed and largely unthought about. Neither main party looks remotely capable of giving them any serious attention.

At the time of the Great Financial Crisis of 2008, there was much concern at the prospect of a lost decade. That fear was realised. But it got worse, and here we are in 2022, in the middle of a second lost decade that we can now with confidence if not pleasure anticipate lasting until at least 2028. It would be a brave man who bet on the idea that Britain would not have a third lost decade, given the prospects for the future. The tide in the affairs of Britain continues to go out.