What caught my eye this week.
Much younger readers who’ve known nothing but the lifestyle-curbing consequences of Brexit – not least no right to live and work across the continent like their parents enjoyed without a thought – may find this hard to believe.
But Monevator lost a big chunk of readers in the aftermath of the 2016 referendum.
Many Leave voters didn’t like it when I de-cloaked as someone who thought the whole thing [1] was a crock – and threw this little website into the (futile) fight against the hardest Brexit on the table.
You see, at the time the investing media and forums were dominated by 50-something Blimps [2] spouting a bizarre blend of nostalgia for Empire, shipbuilding and coal mines [3], and a hyper-free market capitalism which they claimed would get us past centuries-ago proven laws of economics.
To say it was incoherent is to flatter their position with a label.
And today only the most shameless Brexiteers try to make any economic case for Brexit.
I commend this Leave voter on this week’s Question Time for at least not blaming perfidious Remainers for the glaring absence of a Brexit dividend:
#Newsnight [4] audience member on voting leave: “I don’t regret it … it’s a generational thing ”.https://t.co/7kmessYy9v [5] pic.twitter.com/LujZ4ab3hl [6]
— BBC Newsnight (@BBCNewsnight) January 30, 2023 [7]
Still, it takes some cognitive dissonance to say on national TV that Brexit was touted as something that would take 20 years to deliver economic benefits.
I know you can’t be bothered with me running through the laundry list of campaign claims again.
But like the many Leave voters who also say their Referendum win had nothing to do with racism – somehow forgetting a decade of bile from Farage culminating in Nazi-inspired propaganda [8] on the eve of the vote – anyone claiming Johnson and chums warned it’d take a couple of generations to see any financial benefits of us leaving the EU faces the inconvenient fact that 48% of us were also there.
And I for one will never forget what they really said.
Three years of counting the cost
As I will also always note, there was a credible – albeit to my mind quixotic – political argument for Brexit.
If the fullest possible technical sovereignty for the UK was all-important to you (despite any apparent downsides to its absence) then Brexit was a reasonable price to pay for it.
And at another end of the multi-faceted coalition to Leave, racists and xenophobes also had a case.
But if you truly believed Brexit would deliver economic benefits – or if you knew it wouldn’t but you were a leading Brexiteer who decided to dupe the public – then when will you put your hands up?
There is a feeling [9] among the commentariat that the waters have broken on this dam of denial.
I’m not convinced. But three years on from Brexit, and it is striking how even the ever-timid BBC couldn’t find much to ‘balance’ the economic argument on its Newsnight [10] special this week.
The latest for those who’ve lost track of the score:
- The UK is the only G7 economic yet to recover its pre-pandemic size – Reuters [11]
- The IMF says we’ll fare worse than Russia, which is under international sanctions – Sky [12]
- Almost all the 71 post-Brexit trade deals just replicate our EU arrangements – BBC [13]
- The Bank of England says we can no longer grow more than 1% without inflation – FT [14]
- Brexit has left the UK economy 5.5% smaller – Bloomberg [15]
- Brexit supporting areas have fallen even further behind post-Brexit – Bloomberg [16]
- UK car manufacturing output is back to 1956 levels – Fleet News [17]
- Farmers aren’t happy with Brexit – Guardian [18]
- Fisherman aren’t happy with Brexit – IntraFish [19]
- Xenophobes aren’t happy with Brexit – The Migration Observatory [20]
- We’re seeing the worst strikes and industrial unrest since the 1970s – Bloomberg [21]
- No wonder: Brexit has ‘cracked Britain’s economic foundations’ – CNN [22]
- Net retail sales of UK equity funds have been negative every year since the Brexit referendum in 2016, with cumulative outflows reaching £33.6bn – FT [23]
The numbers are in. From an economic perspective Brexit has been a car crash.
Here’s what you could have won
What, if anything, can be done about it?
Well we could rejoin the EU. Personally I believe that’s far more likely to happen in 20 years than the economic reality-defying renaissance envisaged by the Question Time audience member above.
But for now it’s off the table.
At least PM Rishi Sunak seems somewhat pragmatic, even if he has to keep throwing the same rhetorical discombobulation to the loons in his party.
If his government can sort out the (entirely predictable) issues in Northern Ireland, then perhaps it will pave the way for a renegotiated trade settlement with the European Union.
Maybe even something sensible like the softer sort of Brexit that was thrown off the table in the aftermath of our very close run Referendum.
I appreciate it is unlikely. Free movement remains a lightning rod. Even dashed dreams [24] of effortlessly retiring to the Spanish costas have not persuaded enough Leave voters of the benefits of a quid pro quo.
(With immigration from non-EU countries soaring post-Brexit, maybe these Leavers would support reciprocal free movement deals struck with Kabul or Mogadishu instead? They’re not racist, after all. So I’m sure they’d feel at home under the sun there.)
In the meantime sensible politicians like Jeremy Hunt are left scrambling for anything to take the edge off.
Hunt’s recent speech touting [25] the UK as a centre for innovation was all very well.
But people familiar with, for example, the London-based fintech scene he lauded knows it was built with significant input from a wave of talented immigrants working alongside Brits. Some top players such as Revolut were even founded by immigrants.
What’s more, the government has actually been cutting back on support for innovation. See for example its curbing [17] of R&D tax credits for smaller companies.
With the numpty-wing of the Tory party already calling for income tax cuts just months after the Truss fuss [26], you can understand why Hunt’s March Budget will blather on about ‘Brexit benefits’ in the way a parent calms a stroppy child by making promises about Father Christmas in April.
But there are no benefits and there’s ever less money to offset the damage.
That’s it. That’s the bottom line.
Don’t believe the hype
Brexit was of the same fantastical populist thinking that saw man-child Donald Trump vow to build a giant continent-spanning wall and Hugo Chávez give communism a second go in Venezuela.
But unlike those disasters, we’ll be living with ours for decades to come.
Maybe the optimists are right and the tide is changing. Perhaps Brexit support will dwindle and be contained to the right-wing of the Tory party and other useful idiots [27], and the rest of us can try to inch back towards a more sensible economic integration with the giant on our shoulder.
But I think it’s more likely that when this recession ends and the dead cat of the UK economy bounces, Brexiteers will seize on it as evidence that their mendacious project is working.
There will definitely be investment in the future in Britain. There will be new and fantastic British companies. Our universities will continue to turn out some of the brightest innovators in the world.
None of that will have anything to do with Brexit – but when some of it inevitably delivers, it will be claimed as a Brexit dividend.
Our GDP will grow a bit, and Leave supporters will hail it as evidence we’re not shrinking.
There will be no understanding of the counterfactual. Or that we’ll be starting hundreds of billions of pounds in the hole.
[28]I asked an AI for its impression of Brexit.
All very gloomy, but I will add that – aside from ripping away the rights and freedoms you were born with – Brexit needn’t curb your life chances on an individual level.
The long-term advocates of Brexit were always the free-est marketeers of the Tory party.
Similarly, by looking after your own finances – and judiciously investing in global markets, perhaps rebalancing into currency gyrations whenever the pound has a funny turn – clever Monevator readers of a capitalist bent can prosper in a post-Brexit regime.
Have a plan B, in case it all goes truly south. (I mean a second passport or similar).
But I personally think that’s less likely to be needed than it was six months ago. (I’d guess less than 5%?)
The Mini Budget threw a bucket of cold water over the majority of politicians and business leaders. Now nearly everyone understands that rhetoric doesn’t pay the interest on our debt, nor nurses’ wages. Hopefully this has innoculated us against the worst populist derangements.
No, it’s a decade or more of falling behind our European peers that’s nailed-on for us now. Perhaps with more drama to come over Scottish independence.
And for what, eh? Crown stamps on pint glasses?
Ho hum.
Have a great weekend.
From Monevator
FIRE: Emergency midwinter broadcast – Monevator [29]
Family Investment Company: the FIC FAQ – Monevator [30]
From the archive-ator: reasons to rent a house instead of buying – Monevator [31]
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Bank of England raises interest rates to 14-year high of 4% – Yahoo Finance [32]
We’re aware we mustn’t push rates too far, says BoE’s chief economist – Guardian [33]
House prices fell for the fifth month in a row in January… – Sky [34]
…even as rental prices surge to hit a new record – In Your Area [35]
Bill to extend maternity protections passes in House of Commons – Guardian [36]
Shell reports highest profits in its 115-year history – BBC [37]
FTSE 100 closes at new all-time peak – BBC [38]
Cardboard box demand plunging at rates unseen since Great Recession – Freight Waves [39] [h/t AR [40]]
[41]Are we headed towards a ‘polycrisis’? The buzzword of the moment explained – Vox [42]
Products and services
NS&I brings back one-year fixed rate bonds paying up to 4% – NS&I [43]
Will the interest rate rise trigger a stampede for tracker mortgages? – Guardian [44]
Transfer your ISA, SIPP, or general investing account to Bestinvest and get up to £1,000 in cashback. Existing customers included! Terms apply – Bestinvest [45]
Cost of fixed-rate mortgages to fall as UK inflation outlook brightens [Search result] – FT [46]
Scams: FCA blocks more than 10,000 ads from Instagram, Facebook, and YouTube – Guardian [47]
Push into illiquid assets exposes UK pension savers to higher fees [Search result] – FT [48]
What to do if you’re one of the 600,000 who missed the self-assessment deadline – Which [49]
British homes for sale in areas perfect for spring walks, in pictures – Guardian [50]
Comment and opinion
What is retirement? – Humble Dollar [51]
How to survive the financial shocks of redundancy [Search result] – FT [52]
Why gold is valuable – Of Dollars and Data [53]
Are the new private pension reforms enough? – FT Advisor [54]
The best and worst decades to be a saver and investor [US but relevant] – AWOCS [55]
We’re probably not in a low-return world – Morningstar [56]
Retiring at 62? The French have it absolutely right [Search result] – FT [57]
Victor Haghani and Nobel Laureate Myron Scholes on the golden rules of investing [Podcast] – Elm Wealth [58]
How long it takes different asset classes to recover [as measured via fund proxies] – Morningstar [59]
The cost of being single – Yahoo Finance [60]
Retired early and wondering what to do? How about fighting for everyone else – Guardian [61]
Crypt o’ crypto
UK government consulting on future regulation of crypto assets – GOV.UK [62]
Proposed rules set a modest post-Brexit diversion from the EU – Coindesk [63]
Work-in-progress mini-special
People are more receptive to radically re-imagining their work lives – Paul Millerd [64]
American’s fever of workaholism is finally breaking – The Atlantic via MSN [65]
Ten harsh lessons from ten years of entrepreneurship – Darius Foroux [66]
Endless diversification won’t get you deep work you love doing – Young Money [67]
The real cost of shadow work [Search result] – FT [68]
Naughty corner: Active antics
The importance of long-term earnings forecasts – Klement on Investing [69]
The value rotation is just getting started in Europe – Verdad [70]
This is a really trashy rally [Search result] – FT [71]
An old letter from Seth Klarman on the forgotten lessons of 2008 – Investment Talk [72]
Weighing up recession risks vs the prospects for a new bull market – Investing Caffeine [73]
Kindle book bargains
How to Make the World Add Up by Tim Harford – £0.99 on Kindle [74]
The Making of a Manager: What to Do When Everyone Looks to You by Julie Zhuo – £1.99 on Kindle [75]
Fooled by Randomness by Nassim Nicholas Taleb – £1.99 on Kindle [76]
The Art of Statistics: Learning from Data by David Spiegelhalter – £1.99 on Kindle [77]
Environmental factors
In Norway, whale watchers churn a “soup of chaos” – Hakai [78]
How much is a sustainability label worth? – Klement on Investing [79]
Trouble at sea – Biographic [80]
The coming wave of climate legal action – Semafor [81]
Off our beat
Everything you can’t have – Morgan Housel [82]
The antidote to envy – More To That [83]
The hidden link between workaholism and mental health – The Atlantic via MSN [84]
The ‘OK’ computer [History of the pioneering Apple Lisa] – The Verge [85]
Easy steps to improve your health in old age – Humble Dollar [86]
Nothing drains you like mixed emotions [Couple of weeks old] – The Atlantic via MSN [87]
And finally…
“I have taken to living by my wits.”
– Sherlock Holmes, The Adventures of Sherlock Holmes [88]
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