The problems of Britain’s politics and finances should be seen beyond the recent political and financial turmoil which are more a symptom than a cause of its underlying problems.
It is sad to see the oldest liberal democracy in the world fall into chaos. And an advanced market economy in risk of dropping to prolonged recession and protectionism.
This is a brilliant documentary from the FT:
The root cause of the problems we have seen in the last few weeks seems to go back to Brexit, aggravated by the pandemic and, most recently the energy crisis. As they say in the video, Brexit was more like a puncture than a car crash but its effects cannot be ignored, despite a coalition of silence on Brexit within UK politics.
Of course Brexit is not entirely to blame, but it weakened the potential for recovery from the pandemic. Namely for Trade and especially for SMEs that are being left out of their traditional markets.
The ironic reality is that the most prominent Brexiteers wanted to create a kind of European Singapore, but may have produced a more nationalistic, regulated and protectionist country than before. There had always been a disconnect between the dream of the leaders of the Brexit movement (Farage, Boris, ERG) and its voters – mostly senior citizens, less educated, nationalistic and dreamers of the old empire; as opposed to the younger, better educated, more open minded voters for remain.
This sad yet logical result should not be surprising after all.
Some important takes from the video:
-Trade intensity decreased dramatically post Brexit.
– Trade recovery post covid lagged way behind other G7 countries.
– Investment dropped below trend.
– GDP was cut by 4% (impacting the fiscal deficit much more that the recent “mini-budget”) according to the Office for Budget Responsibility.
– Huge costs and time to “reinvent” regulations that existed within the EU, are having a much greater impact than elusive deregulation moves.
– Labour shortages in some sectors that relied on EU man power.