Political rant time. Feel free to skip and go straight to the money and investing links below.
One of oldest tropes in storytelling – right next to the posh British actor being the villain – is that chickens come home to roost.
There’s that same sense of reckoning in our national drama this weekend. There’s even a posh British actor ruining running the country.
Nearly six years after Johnson won his Pyrrhic Brexit victory, we’ve still almost nothing to show for it except a slower economy, a lorry car park in the South East, and the Pythonesque return of crown stamps on pint glasses.
True, the pandemic makes it’s hard to gauge how much weaker trade is down to our lousy new economic reality (lousy unless you deal in paperwork, red tape, or customs booths).
But it’s not looking good:
Source: Politico
Europe, you’ll remember, was also hit by Covid. It’s shrugged off Brexit.
Meanwhile Northern Ireland teeters, thanks to the consequences of Johnson ditching Theresa May’s deal for political points then whining about it later.
There’s no sign of £350m a week for the NHS either. Shocking.
Indeed National Insurance will be hiked from April to help plug a shortfall in health and social care funding.
Regret
NHS funding would have been stretched even if we hadn’t decided in 2016 to commit the most bizarre act of self-harm in Europe since that poor bloke went on a date where he asked if could be fried in garlic and eaten.
But we did, and that’s made the post-Covid reckoning even worse.
Beside the human toll, Covid has cost the economy untold billions. Much money was well spent, plenty not. But aside from the direct medical costs, shutting down the economy and keeping millions on furlough was always going to leave an immense bill. While we can certainly debate when we should start repaying it, nobody should be surprised it’s in the post.
The bill won’t be covered by any oxymoronic Brexit dividend. As the Financial Times opined this week:
Although unemployment is low, evidence of a labour force problem is mounting, with 1mn fewer people either working or seeking work than we would have expected had the pandemic not occurred. That is roughly a 3% hit to the available labour supply.
As spending has increased, this has stoked inflation far more than almost anyone expected. It means the scope for catch-up growth is running out, now that unemployment is back at pre-pandemic levels.
Worse, the UK growth rate is also artificially boosted by £25bn of corporate tax incentives this year and next, but investment remains weak. In the third quarter of 2021, it was still 4% below pre-pandemic levels, lower than any other economy in the G7. UK exports have also not joined in the global boom.
All this suggests that businesses are looking relatively unfavourably on this country, even before corporation tax rates rise from 19% to 25% in 2023. The IMF also reports good growth now will soon be followed by a slide to near stagnation in the pre-election year. It reckons the UK economy will end 2023 only 0.5% larger than at the start, the lowest in the G7.
What’s that? What about leveling up?
Besides the whiff of pork belly politics, the Welsh government for one has already run the numbers and concluded Wales will be £900m worse off compared to what was lost in funding from the EU.
Again, nobody should be surprised. Smaller pie. Smaller slices.
This is the UK economy in 2022.
Blue Monday
Beset by near-anarchy, when quizzed Johnson obfuscates over all this to tout the UK’s vaccination record like a broken droid stuck on repeat.
I’m glad that an adult was put in charge of the vaccine program, that the NHS and volunteers delivered, and that Britons mostly got their jabs.
But a rich country securing and deploying the Covid vaccine is table stakes at this point. We were quick out of the gate, but that was a year ago.
Figures show Germany and Spain are now more fully vaccinated than us, for instance. Those countries suffered fewer deaths per capita too, for what it’s worth.1
But perhaps the success of the rollout does seem singularly incredible if you were partying throughout much of 2020, in the same way a stoned student might be pleased they can still recite their own name to an officer when pulled over for drink driving.
Bizarre Love Triangle
As if friction-full trade, higher taxes on a weaker-than-otherwise base, and our leaders being under a police investigation wasn’t enough, household energy bills are also rising.
This one we can’t lay at Downing Street’s door. Wholesale prices have soared globally. That’s the main driver here.
However the spectacle of MPs cheering the suspension of planned fuel duty rises for ten Budgets in a row does fit with the Day of Reckoning theme.
The fuel duty escalator was introduced as a (token) measure to help wean us off fossil fuels. Yet even this small gesture was too much.
Now here we are decades into scientific consensus that curbing carbon emissions is vital – stat – to prevent catastrophe, and we’re still at the mercy of what autocratic regimes will dig up and sell us to burn.
The pandemic did precipitate this immediate crisis. Energy demand plunged in early 2020. Oil was briefly worthless. As the global economy has spluttered back to life, supply chains have been pulled all over the place.
Also yes, it doesn’t help that at the margin Western energy companies have been deterred from developing new resources by ESG factors (though the oil price touching $0 a barrel in 2020 must have entered their calculations.)
But here’s the thing – those ESG concerns are warranted. Global heating from fossil fuels continues apace (if you don’t believe that you’re irrational) and we must transition to another path, yesterday.
Politicians and voters alike are complicit in not biting the bullet and investing hugely in renewables – and probably nuclear – decades ago.
Instead, the government slashed green incentives in 2016 and MPs wave their ballot papers every Budget as fuel duty rises are put off again.
Why aren’t all our homes insulated? Why isn’t our coast festooned with offshore wind farms? How did my friend just fly to London from Spain for £9? Why aren’t solar panels on your roof a no-brainer? Why don’t we have several new nuclear power stations? Why are SUVs even a thing?
I guess we had bigger issues to worry about. Like blue passports.
World in Motion
Finally there’s the tension with Russia over Ukraine. In my opinion (worth taking with even more salt than usual here) Putin’s posture is enabled by Europe’s need for Russian gas, at this time of elevated energy prices.
In addition – and again reaping what you sow – years of divisive US foreign policy as absurdist theater under Trump must have emboldened the Russian hawks. The UK has been an international laughing stock since 2016 obviously, but with Angela Merkel off the stage Europe also looks suddenly lightweight. And the Americans are only just re-finding their feet.
NATO seems to be holding together, but 30 years on from The End of History should it really be touch and go?
Again, imagine if we’d spent the past five years on things that mattered instead of a grand delusion. Climate change, the real causes of growing disparity in economic outcomes in the UK, cancer, world peace – maybe even the threat of a new pandemic that Bill Gates was talking about in 2015.
Instead we voted to injure our economy indefinitely2 and only afterwards argued about how to do the deed, for years on end, on the nightly news.
To make it happen we elected the worst Prime Minister in living memory – a man who has fully lived down to his reputation.
Well played Britain. Well played. What a waste of time and effort.
Vanishing Point
So we’re a country where millions can’t afford their fuel bills even as the planet broils, presided over by people who broke their own lockdown rules as even the Queen mourned alone, belatedly attracting police attention.
All with Union Jacks cast about like confetti at a shotgun wedding.
If this doesn’t look a bit ominous, read more history.
I don’t see this as a party political issue. To the dismay of my friends, I have occasionally voted Conservative in the past and I imagine I could again.
But key figures in this government lied to win the Referendum, and have kept the fantasy going since. Johnson is no fool, but his biggest strength is unfortunately his weapons-grade charisma. Less winning personalities might have had occasion to reflect on the consequences of their actions, and even learn a thing or two.
Well, maybe he’s never had to, but we can.
This is not fine. Technology has screwed politics everywhere – it’s hardly just a British thing – but we can only sort out our own house.
Something must change before our will is exhausted and we give up caring.
Have a nice weekend.
From Monevator
DeFi: down the decentralized finance rabbit hole – Monevator
Will your spending decline in retirement? – Monevator
From the archive-ator: Reasons to buy a home instead of renting – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!3
Bank of England raises interest rates to 0.5% – Guardian
Energy price cap to increase by £693 from April – Ofgem
Are you eligible for the government’s £350 energy bill bung boost? – Which
Rishi Sunak defends government response as energy bills soar – BBC
Water bills are also set to rise – Guardian
Don’t ask for a big pay rise, warns Bank of England boss – BBC
Stamp duty receipts hit record after tax holiday ends [Search result] – FT
Post Office wins new three-year deal to deliver bank customers’ cash – Sky
Two million taxpayers missed the self-assessment deadline – Which
Agatha Christie could afford a maid but not a car – Full Stack Economics
Products and services
Halifax and Lloyds launch 1.66% 10-year fixed rate mortgages – ThisIsMoney
Open an account with InvestEngine via our link and get £25 when you invest £100 (T&Cs apply) – InvestEngine
Energy price cap may be updated every three months, says Ofgem – Guardian
Start a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor
Best Buy savings accounts bounce after BOE rate rise – ThisIsMoney
Government’s new consultation to advance Pensions Dashboard – Which
Homes for sale in arty villages, in pictures – Guardian
Comment and opinion
Remote work isn’t the problem. Work is – Vox
What you learn from a year of bad financial advice on TikTok – Vice
The price of admission in the stock market – Compound Advisors
10 things I love about market corrections – A Wealth of Common Sense
Charles Ellis: five times lucky – Humble Dollar
Low future returns will call time on pension funds – Klement on Investing
Generational wealth – Indeedably
Skiing off cliffs – Joseph Wells
Crypt o’ crypto
Bitcoin is a terrible form of money (but a good store of value) – Prag Cap
Value investor’s guide to Web3 – Sparkline Capital
decentralization – The Reformed Broker
Owning Bitcoin may make you more desirable on dating apps […] – CNBC
Naughty corner: Active antics
Proportionally, more UK than US stocks were 10-baggers last decade – Schroders
Growth potential in the natural capital of farmland [Search result] – FT
What’s your edge? – Mutual Fund Observer
Long-term returns of the oldest investment trusts – IT Investor
Jupiter reviews fees on Chrysalis trust after managers pocket £60m – FTA
Lessons from investing legends [Like work for Jupiter?] – Novel Investor
The curious case of rising stocks in the night-time [Search result] – FT
Bubble stock meltdown – Verdad
Covid corner
Why Covid will always be an epidemic, not endemic, virus – CNBC
What we know about the Covid sub-variant Omicron BA.2 – BBC
Scientists admit their Covid mistakes [Brave these days…] – Guardian
The Covid jerk – The Atlantic
Kindle book bargains
The World for Sale by Javier Blas and Jack Farchy – £0.99 on Kindle
The Joy for Work by Bruce Daisley – £0.99 on Kindle
What It Takes: Lessons in the Pursuit of Excellence by Stephen A. Schwarzman – £0.99 on Kindle
The Perils of Perception by Bobby Duffy – £0.99 on Kindle
Environmental factors
The US refuses to fall in love with electric cars – Wired
All coral will see severe bleaching when global heating hits 1.5C – Guardian
We are living in an era of unnatural selection – BBC
How to evaluate your company’s carbon risk – Harvard Business Review
Get artistic mini-special
Create for just one hour a day – More To That
Art should be a habit not a luxury – The Atlantic via MSN
The banality of genius [On The Beatles’ creativity] – The Ruffian
Off our beat
Fluke – Morgan Housel
DeepMind AI rivals average competitive coder – BBC
The moral calculations of a billionaire [Search result] – WSJ
Wordle sold to The New York Times. And that’s a good thing… – Kottke
…although will it get caught in the paper’s crossword culture wars? – Kotaku
An influencer’s take on social media’s harms – Slate
What was the Ted Talk? – The Drift Mag
And finally…
“Who wishes to fight must first count the cost.”
– Sun Tzu, The Art of War
Like these links? Subscribe to get them every Friday! Note this article includes affiliate links, such as from Amazon, InvestEngine, and Interactive Investor. We may be compensated if you pursue these offers, but that will not affect the price you pay.
- I continue to believe we can’t be conclusive about deaths per capita until the pandemic is over and all the data is in and normalized. [↩]
- Reminder: I never thought Brexit would be a nuclear bomb for the UK economy. It’s more like a dead-weight that we’ll have to carry for decades, hampering trade and investment, and reducing GDP by perhaps 0.25% in a bad year. And that will seriously add up. [↩]
- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]
Comments on this entry are closed.
@TA I think that the voices that agree with you ( I include myself here) will be more silent than the opposition on this piece sadly. Well said.
I wish you had included a ray or two of hope.
… 1 typo spotted… “belatedly attraction police attention”
Have a good weekend.
JimJim
We are just playing catch up.
The rest of the world know and expect their politicians to be narcissistic, corrupt liars and cheats
Came here to read something not leftist or babble but ended up in a sea of tripe with a helping of BBC links thrown in for good measure.
The Full Stack price change chart and article are interesting.
TV -100% and toys look a little odd. CRT TV prices are £0, but modern TVs are cheap by historical standard but not quite zero. Interesting figures I recall from my parents spending in 1984 – cheapish HIFI £400, video cassette recorder £400 (were £800 in 1980), pint of cider in pub 79p, chip shop pie chips beans and gravy not much more than £1.25 (a night out for a fiver!) –
Car costing are interesting too – I’ve had one car loan (1992) financing costs were 19.9% APR and over 3 years added 30% to the cost. Today finance cost are almost nil.
Housing – if you look at the real cost of mortgage repayments at 1-2% interest v 4-5% interest lifetime housing costs are very reasonable (hence current house prices).
B
Ps Theater
Pity Neil Furgeson doesn’t point out how flawed his modelling was amongst the list of mistakes in that guardian article. Also i’m yet to see a definitive study which shows the effectiveness of cloth masks in 2 identical groups of people.
Who knows, perhaps in 20 years the article link might be ‘scientists admit their climate mistakes’. After all the definition has already changed from global warming to climate change.
Im definitely an irrational skeptic…
At the bottom of the page, under “Related”, I’m seeing a server error.
Warning: count(): Parameter must be an array or an object that implements Countable in /home/monevator/apps/monevator/wp-content/wptouch-data/extensions/related-posts/related-posts.php on line 167
You might want to set display_errors=off in php.ini to save unsuspecting visitors from the ugly underbelly of server side errors.
Excellent article… spot-on analysis of the sorry state our pathetic country and those who are doing their very best to ruin it. Thank you.
I try not to think about Brexit anymore, it’s had a huge impact on my business yet my parents still think it was a good idea. Come to think off it they still think Boris is the bees knees.
@Jim People have been claiming climate change was a hoax for several decades yet the actual measurable temperature increase is inline with forecasts. The only thing that has changed is newer models are becoming more precise.
I agree with your article but as @JimJim notes similar mindsets are generally silent (or drowned out).
The other problem is who do you get to replace the current offenders? Regardless of the political party they all appear hell bent on following their own party agendas regardless of impact and once in power they jettison promises made (Like lemmings at the cliff edge).
There seems no political party willing to sacrifice their time at the gravy trough and do the right thing. A staunch labour supporting friend recently confided that their personal convictions was being heavily tested due to the insane political in fighting and idealistic retoric was taking over actual sensible policy decisions.
Just look back a decade at how the liberal democrats acted and quickly abandoned their so called long held beliefs when they shared power with the Tories.
The path to power seems full of lunacy and backdoor deals with unsavoury shadowy lobbying. In politics there doesn’t appear to be a party that’s a shining example with knightly virtues.
So we look doomed to repeatedly choose from a list of snake oil salesmen where the verdict is often overlooked due to a less than fair system that favours who is in power at the time. The rules only allow change to be made to the system by only those currently in charge so it’s a case of getting the fox to guard the chicken coop where little good comes from such actions!
We do need change desperately but who’s going to be there to be brave enough to do it?
@all — Thanks for the comments. As long-time readers will know, I didn’t take a position in the run-up to Brexit as I wanted to avoid politics on the site and I regretted it ever since. So this sort of thing will happen every few months. Totally understand why some readers may want to just skip past it, which is why I put the disclaimer at the top. It’s not part of the core curriculum! 😉
@Bob — May well be babble and tripe, fair enough, but as I say I don’t think it’s leftist. Many times over the past five years I’ve been accused here of only caring about the economy, for example. And here we have slower growth driven by ideology which will play a part in higher taxes, not to mention more politicians meddling directly in regions (under the guise of ‘leveling up’, rather than supporting a more neutral agenda such as improving education or tax incentives for investment). Brexit Toryism looks like Big State to me.
Unless you count climate change as a leftist issue, I suppose. That seems bizarre to me — everyone’s grandkids have a miserable future if it gets out of control, however you happen to vote, and 99-100% of scientific papers research its man made (link in the article under ‘consensus’).
I don’t have any kids and I’m middle-aged so I’ve not even got much of my own skin in the game. 🙂
Or maybe a definition of leftist is now caring about anything other than myself.
I bet you enjoyed getting that off your chest!
I have always been more interested why the country is so evenly split
Perhaps unless this subject addressed seriously then both sides will continue to shout at each other over the fence making the situation worse and more intractable
These divisions happened in what appeared to be good times to some but not to others.A 50% of the population obviously didn’t buy the “good times”!
I would be more interested in peoples thoughts and reasons on why this situation has occurred
Then we can perhaps be more constructive as what to do to correct the problem!
It is no use pretending Britain is alone -our situation is occurring across the “free” world -America is a prime example
For a lot of people-arguably the poorer 50% things are about to get a lot worse-increasing food and energy prices
Unless there is more good quality leadership things could get very unpleasant
Boris seemed to end the Brexit limbo for good or ill and played a blinder with Covid vaccine
However to “party” while imposing tough rules on the rest of us shows a “them and us “attitude amongst our leadership classes that doesn’t bode well for the future
xxd09
A good piece/rant, and entirely accurate conclusion of the multifaceted shit show the government has created for themselves.
@Bob. If you disagree with it, explain why, rather than resorting to lazy (and incorrect) soundbites about the political spectrum or a neutral public sector broadcaster that don’t answer the points or offer any debate. But of course, there isn’t an answer because brexit was never about the obvious economic self harm that isolationism caused. It’s funny how only those on the right complain about wokeness or ‘lefties’. Perhaps they realise now they have been had by a dishonest charlatan who has run out ideas and empty words. Look at the Economist, Financial Times, who hit the nail on the head too, are they ‘leftist’ too for looking at things like reality, facts and the wider picture rather than sucking up populist rhetoric?
Thanks again @TI, have a good weekend all
Thank you for this article. I agree with just about everything. As someone who has worked in the net-zero transition (under its various names) for over 30 years, I am frustrated that the Telegraph and Tory ministers can still publish factually incorrect but politically convenient bollocks about climate change and energy costs. If we had invested earlier in household insulation and renewables we would be better able to weather these storms. These people are not just spinning the facts, or taking a particular perspective, they are flat out lying.
I have followed the work of the IPCC since the beginning, and whilst some claim it is a massive multi-government conspiracy involving thousands of actors, and others that it is too conservative and things are much worse, the consensus has been spot on so far.
As far as our interest here in finance is concerned, to paraphrase “it’s the economy stupid” – it’s Brexit stupid. The evidence is the the ridiculous Brexit Benefits pamphlet from the Government. As near totally content free as you can get. At least the Levelling Up paper had a useful timeline of largest cities by population in history. Irrelevant to the topic, but interesting.
Throw in our COVID-19 response, and we are not in a good place as a country.
I don’t mind people arguing over what to do about the various challenges, but I have no patience with those who close their minds and either will not acknowledge facts or call them lies.
So thanks for this article once again.
@ti – been listening to new order? I can’t help but think that the economic stresses in the UK have been slowly building for a long time. What’s worse – there seems to be no easy solutions. I would hope the levelling up stuff works but have zero faith in our govt system delivering.
Remonaner quoting a remain newspaper. What a shock!
FT trying hard to push their doom mongering even more.
UK’s gdp was already back at pre-covid level in November, while Germany wasn’t.
But let’s pick and choose some statistics that can keep remoaners happy.
You lot will struggle once Boris leaves and you don’t have a target man.
The bigger problem with such opinions is by painting everything with Brexit, you give a free pass to Boris, which is the reason public are not outraged by what he does.
@Nearly There — Thanks for the bug report. Trying to resolve at root! 🙂
Dear TI,
Don’t let the bastards grind you down!
BTW – Anyone confused by climate science can find the high level summary here:
https://www.ipcc.ch/report/ar6/wg1/#SPM
Good article. A minority of the 2016 electorate were true Brexit believers. Most Brexiteers then and more so now, don’t care any more and not merely because they think “Brexit is done”. Public opinion is temporary and fickle and most leavers have moved on. Similarly, witness the PM’s complete reversal of political fortune, so incredibly quickly. Green measures are at the mercy of political considerations and calls for delays due to up front/adjustment costs. Manchester has just delayed its Clean Air Zone by two years and it’s likely to be watered down. One of the most polluted cities after London.
@ TI: I pretty much agree with your diagnosis, but am becoming inured to it all – caring a lot about other people’s stupidity/irrationality/mendacity is probably not good for one’s own emotional equilibrium. To restore your usual good humour, may I suggest The Echo Chamber by John Boyne? Had me laughing like a drain.
Every time you write this rant, I’ll write that we have no regrets here – but then I do work for “an irrelevant provincial manufacturer”.
@TI
It’s your blog and you can of course write what you want. No one has to read it. Hell, you could preface the links with a piece about carp fishing if you wanted. But what is the point of your political piece? Serious question. Your audience are better read than most and have their own political opinions, often strong ones. Sure, you personally might find it cathartic but is that not a tad self-indulgent? Or am I being unfair? You’ll certainly get some validation from those who agree with you, and no doubt we all like to be stroked every now and then. But no one’s mind is going to be changed by what you write. So what’s the point? It may sound like I’m having a pop, but I’m really not. It’s a genuine question.
Anyhoo, thank you for the links as ever. And keep up the good work.
Spot on. I have a lot of time for this site and it’s writers, but this is like reading Bill Keegan’s weekly whinge in the Guardian.
@TI. I like these rants but I sort of wonder why you bother. As an aggregate, the population of this country refuses to take responsibility for their choice of leaders or their choices on anything really. They continue to prefer mystical beliefs to data. It’s always the fault of the “other” in some ridiculous conspiracy theory. It’s odd since at an individual level most people seem broadly sensible but clearly the sum is far far less than the parts.
The levelling up idea is an example: popular but utterly stupid. First, it just ain’t going to happen. As German unification shows, it would take trillions, which we don’t have and, even if we did, it would be a shocking waste of resources. More importantly, what exactly are we trying to level up? The provincial parts of the UK are already very rich by any global metric. London is one a few global hot spots for economic activity, an anomaly. You can’t make the whole of the UK like London, in the same way you can’t make Montana into New York. It’s just daft. We just run the risk of damaging London.
Frankly, it will be a miracle if the majority of the UK’s population can hold on to their current exalted position over most others over the next few decades. The idea that their position can improve in a relative sense is just a fantasy.
@BuildBackBetter. The one I like to cherry pick is the government’s own Office of Budget Responsibility forecast of a long term 4% reduction of GDP.
Even the government know it’s a stupid idea, but ideology, stubbornness and bare-faced lying and ignorance reigns supreme. No coincidence all the sensible Tories who actually get it or are hoping to boost their own career through idealistic opportunity have left or have been purged.
https://www.reuters.com/article/us-britain-eu-reality-explainer/explainer-brexit-trade-deal-will-lessen-but-not-kill-the-economic-pain-idUSKBN28Y1M5
*aren’t hoping too, I meant. See Rudd, Gauke, Grieve
For a good debunking of Boris’s current fallback of “but we’re the fastest growing economy in the G7” listen the latest More or Less on R4.
Utter hogwash (as he might say) making creative use of the data set.
I think the phrase ‘sick man of Europe’ might be making a comeback soon with reference to the dear old foolish UK.
Definitely time for a New Order.
What about leveling up?
levelling in British English
Enjoyed the New Order references 🙂
Just wanted to say that the “Bob” is a different “Bob” to the “Bob” who has posted here in the past and holds different and hopefully more rational views. Wish I knew how to get a little round picture so people would know.
Hi @TI
It’s hard to disagree with most of what you’ve written here, and the way things have planned out with this PM have been tragically predictable.
However, I don’t think we can simply conflate the appalling behaviour of one man and parts of his party with the whole Brexit project.
There were plenty of good arguments both for and against leaving the EU, it’s just a shame we didn’t hear much about them during the campaign. I still try to be open minded about this and listen, but your rant doesn’t actually mention the EU at all! (except to say Wales has lost some development funding). I’ve always thought that was the biggest problem with the Remain campaign – it was all about telling people how stupid they were and what a disaster Brexit was going to be, with almost nothing said about the benefits of EU membership. People didn’t really appreciate that, just as they didn’t like the way Hillary spoke to them when Donald was ready to pay slip service to their prejudices. There’s this lingering feeling that the London centric elites don’t really ‘get’ the lives of ordinary people in the rest of the country.
I still hope we can eventually strike a more sensible deal with the EU where we all receive mutual economic trading benefits without being tied in to all the political side and the unlimited unskilled migration. I’m not sure if that’s a “cake and eat it” fantasy, but I’m still yet to hear a proper explanation of why it can work for Norway and Switzerland but not the UK. Or for that matter, how countries like Australia and Singapore succeed without being in a close political union with their neighbours and with their own currency.
I ‘remain’ genuinely interested to understand this, but I’m afraid the “look at this scary graph” or “studies prove X” line of argument doesn’t really cut it for me on its own.
@Mousecatcher007 @ZXSpectrum48k — It’s a reasonable question. 🙂
I think partly as I said above I rant now and then as a response to who/what came out of the woodwork after Brexit (much of which was deleted due to it being straight out racist/xenophobic “go back home” type stuff).
Of course even at its best this site makes only a small contribution to people’s lives, but the thought that my platform was making any of the worst of the Leave contingent any richer was pretty demotivating.
(Note: Just voting Leave doesn’t get you in this bucket. If you had another (incorrect) view of the economics or if you voted for it for constitutional reasons and are realistic about the consequences then no complaints from me either. It’s the racists, xenophobes, nationalists, and delusional fantasists I object to).
It’s perhaps hard to relate to how that feels unless you have put a lot of work over many years into an artistic or publishing or some other public-facing project. I suppose it’s a bit like when a singer despairs of some of their fans? You take it sort of personally.
Also, as I have had to remind people for years I never said Brexit would be an overnight car crash. I thought it’d be an economic drag for at least a decades or more (perhaps even assuming ‘Singapore-lite’, which seems to have been abandoned anyway) and that at the same time the manner of Leave’s winning would poison our politics.
Since both are manifestly coming true, I suppose there’s an element of “I told you so.”
I said I won’t forget this national injury, and I won’t.
It’s pretty hilarious how pathetic it’s all been. Sometimes I sit down with true Remoaners (in contrast I’ve genuinely tried to understand the other side — e.g. my consistent acknowledgement of a constitutional argument) among whom I’m the right-wing free-market loon of the group, and I’ll try to cast about for some economic benefit *for almost anyone* from Leaving. But there’s almost nothing.
Imagine if this had been the 1980s and we’d been for/against Thatcher. We’d have economic regression in the provinces, versus booming new financial services and a surging economy. There’d actually be two sides to the debate.
With this there’s pretty much nothing, except fewer economic migrants from the EU, who seem to have been replaced by RoW migrants anyway. Everything else is the same but more (reduced freedom) or less (slow grind down on GDP) worse.
It’s like we voted to be poorer purely so we could all believe in Santa Claus.
The only caveat is perhaps it’s 1981 in Thatcher-equivalence not 1987, especially due to the pandemic, but since there’s no economic rational for Brexit I wouldn’t hold your breath.
There is however a nationalistic rational for Brexit, so I fear we could see even more of that.
And as a reminder to those who call me a lefty whinger that I’m a Thatcher-fan:
https://monevator.com/margaret-thatchers-childish-children/
Forget Churchill, Johnson is like a children’s clown in comparison to even John Major.
Maybe I do hope that I can provoke a waverer or two into an honest re-evaluation of what this ridiculous project has achieved, and why it came about. But I agree nobody really changes their mind, and there are better sites for it.
Ultimately we lost about 25% of our readers when I came out against Brexit in 2016. That was a big price to pay but I consider it worth it compared to self-censorship.
I try not to overdo it and I appreciate it’s off-base for some readers, but I think it’s pretty difficult to run an independent site like this if you don’t say what you believe on the most important issues. I hope the more reasonable people who disagree with my verdict on Brexit can skip past it once every few months as a sort of reading tax.
In general the quality of pro-Brexit comments doesn’t suggest I’m out of tune with most readers, anyway.
As for any climate change deniers, you’re welcome to delete this site from your bookmarks. That’s a long ago settled debate.
@David — The benefits are we had no friction at borders and hence seamless trade, higher economic growth, we were the springboard into Europe for globally important US companies, all this made virtually everyone in the country richer (the only debate — which was only in one study — was about the poorest decile, which we could have easily offset with taxation had the sort of people who wanted Brexit wanted to do that).
Culturally we got the freedom to live in nearly 30 other countries without any paperwork or settlement debates. Working abroad was easy too.
At the same time smart people can and did come here to work, including many entrepreneurs who helped kick start the Fintech revolution in London, but also eg NHS workers, care staff, and the many builders and tradespeople who visibly transformed how easy it was to get anything done, housebuilding etc.
It was basically such a no-brainer (which is why countries want to get in, and we’re the only one that has got out) that the case was soon outlined.
Unfortunately that was hard to set against specious anecdotes about someone’s father who worked in a shipyard or a new skyscraper in London and not in Burnley or other stuff that had nothing to do with the EU.
Late in the game the pro-EU side pointed out it had also done a pretty good job of making a continent of warring parties into trading allies — something I consider kind of moot as like globalization it was as much due to other factors, but as a higher-order ’emotional’ appeal it was to my mind hard to beat.
But no, we got flag wavers talking about the Empire in response while the Germans and French have long ago looked past the fact they slaughtered millions of each other in a pointless conflict and instead trade freely, live and work in each others great cities, etc.
@TI:
I am no Bozo fan, but do you think things would have played out better under Corbyn? IIRC those were the only alternatives!
@Al Cam — It was indeed a diabolical choice. Maybe one benefit of Corbyn is he might have taxed and spent in a way that would actually address some of the complaints people were tricked into thinking leaving the EU might impact in the less prosperous parts of the country. Albeit for another kind of economic cost on a national level.
The number of people who tell me Starmer can’t win because he’s too boring is telling. Great, so we have to keep choosing between divisive idealogues like Johnson, Corbyn, etc? It’s pretty depressing where politics is right now.
Perhaps @ZXSpectrum48K is right and I should just leave the public too it. I’m rich enough and I have my ‘bug out’ optionality in place. 😐
I’m ‘probably’ a Conservative voter. Hey-ho. But I made my mind last month that the current incumbent is just a buffoon (I use a selection of different four-lettered words in private though). I find his antics don’t border on the embarrassing – they’re over it and over the horizon.
It’s astonishing the best the UK could offer was a choice between Johnson or Corbyn. There’s a lot of work to be done – if we’re not careful it will be the decade the UK was left behind.
@ The Investor. I don’t think your words are a leftist rant. I think they’re just a reflection of where we are 6 years down the line. I’m pretty p*ssed off like you seem to be!
I think you have to be careful not to put the cart before the horse when talking about the economic damage caused by Brexit. I see the UK as having struggled with some seemingly intractable problems for many years and Brexit is a consequence more than a cause. Low productivity, too many people in Mcjobs that don’t pay enough to cover the cost of living, lack of competitiveness and so on. With every economic downturn the UK seems to struggle to recover and loses more share in world markets, the current account steadily worsening, debt increasing.
Our economy and politics seems to be structured to keep shovelling money to the already rich while squeezing the less well off who are already struggling. The governor of the Bank of England calling for wage restraint is a classic example of this bias. Why isn’t he calling for restraint in profits or prices? This is why it is so difficult to get to grips with the issues we face like the climate. In a society where more and more people feel the game is rigged against them it is incredibly difficult to get people to give and inch and make sacrifices. Telling people there is no alternative is not going top work.
Garbage post from start to finish.
@cat793 — Thanks for the considered response, and I certainly agree there are structural issues within economic opportunity and outcomes in the UK economy, as elsewhere.
I agree even more so that people are sensitive to it.
However as was outlined at the time and repeatedly find myself restating, the EU didn’t have much of anything to do with this.
Technology, network effects, and globalization are the key factors. I’d argue membership of the EU helped most people in buffeting against these forces.
Again, no evidence was produced then or now that this was the EU’s fault.
The UK may have been losing out on the world stage, but this is more a reflection of the growth of Asian and other developing markets in my view. It wasn’t much to with the EU.
Take a look at this data and graph of how the UK fared after joining the EU in 1973:
So being in the EU apparently benefited the UK against our most comparable neighbours.
See also the right-hand side of the graph, the UK’s outperformance was if anything accelerating in the most recent years before the Referendum!
The same source shows median income growth was more equally shared in the UK than the US. (I suppose the inference being that ‘going alone’ post-Brexit would be no automatic panacea for income inequality, although we can all see a lot of factors going on in that comparison I’m sure).
We have grown far more slowly than say the South East Asian economies in the past 50 years. I’d strongly suggest most of us would rather not have started where they did though!
@TT — Another splendid contribution from your side of the camp. Keeping holding the intellectual high ground and winning the arguments with facts and reason.
@TI – everyone has their own view of the world which they’re welcome to. People also have different experiences in life which affects their viewpoints,. Try not to take it too personally (difficult I know) and think about all the good your blog has done for folks. If you want to get on your soapbox every now and then, fill your boots, it’s your blog, sod ’em. I try to be open minded but ‘m sure someone will believe I’m not or I’m some kind of weirdo – heyho! It’s their opinion and I don’t always agree with it – that’s life I’m afraid.
Also let’s not forget there were a lot of things which happened on the lead up to Brexit. Remember the PM at the time (Cameron) claimed he was going to fight the super rich avoiding tax, only to be found out that both he and his family were doing exactly the same. Some voters may have just wanted to punish him and Brexit was the weapon available as Cameron was an EU stay supporter.
I really wish we had a better political system which looked at the merits of ideas and both sides worked together to make things better rather than simply deciding to engage in a series of aggressive slanging matches. But I realise this is just pure fantasy.
Labour has the unenviable record of finding ways to defeat themselves by constantly squabbling internally so they end up helping the conservatives. Corbyn also did a few blinders by inferring he would nationalise everything leading older voters to remember the 70s. And the party gave out a lot of mixed messages to voters and repeatedly refused to provide clear answers to a number of important questions.
The Lib Dems had also recently trashed their own reputation in the coalition a few years before and the Brexit supporters wete being much more vocal in the media from the getgo, while the MPs on staying with the EU believing leave could never happen started calling people stupid if they didn’t agree with them ( never a good tactic).
It makes me cringe when I remember all those lovable rogue comments about BJ when he was in the leadership challenge. He always reminds me of the Joker from Batman which is frightening to visualise when I see he’s in charge of the country (for now anyway).
I’d take substance over charisma any day so regardless whether Starmer sounds boring or not he needs to get his party in gear to work together and come up with some proper ideas (maybe look at stuff that has worked well somewhere else in the world) rather than just pick holes in other peoples plans. Like I said we need our MPs to actually tackle the issues of the day head on rather than try to hide them with spin, just shout at each other and help themselves to the spoils – it’s possibly too much to hope for though.
@TI
You are indeed entitled to your opinion. All I would say why so backward looking. Whether you or I voted for Brexit or not, the die has been cast. Rather than continually harking back to something that cannot be changed, move forward with confidence about things you can help shape / change for the better.
When right wing libertarian free market wing nuts like the investor bemoan the state of the modern Conservative party you know it’s not the party of Thatcher any more.
The people wanted cakeism in terms of both having cake and eating it.
In fact they are finding choices had consequences.
Who knew!?!
@TI (#34):
Indeed it was a diabolical choice. And IMO it is hard to imagine it improving any time soon!
Re: “Perhaps @ZXSpectrum48K is right a ….”
On the other hand, you could always get involved and help to sort it out! However, I suspect therein might lie a plausible explanation – who in their right mind would want to be a politician? So all we are left with is a collection of mediocre comedy characters. And if you take a look at local politics its even worse!
@Bally001
It’s you who are backward looking.
I really doubt the UK’s current trade agreement with the EU will last a decade not least because it puts a border across the Irish sea
No parliament can bind its successors
The government unfortunately is us!
Vigorous polite debate is the only way out
Hopefully a new generation of rather more competent leaders will emerge soon as the “peacetime generals” continue run into the sand
xxd09
Lets face reality people. The UK has always been a bit of a sh!t hole.
Personally, I just try to enjoy life as much as I can. Couldn’t give a monkeys about climate change or brexit or how unfair high property prices are.
We are all just hypocritical apes at the end of day.
Right, let me get back to booking my £15 flight to Portugal 🙂
@No Free Lunch
Are you Grant Shapps posting on another sock puppet account?
@cat973. “In a society where more and more people feel the game is rigged against them”
That is the issue. They “feel” the game is rigged against them. But it isn’t. The game was actually rigged hugely in their favour the moment they were born into a rich, highly developed country with the rule of law, state health care, education system etc.
People need to stop with all the feelings and beliefs and just look at the numbers and data. We are still close to the top in global pay terms. We have an incredibly good standard of living.
The major change is just technology, not the EU. Technology is a wonderful leveller. The ease of which people in EM countries can now attain information is destroying that in-built privilege from being born in the right country. Yet many in the UK seem to see it as unfair when it’s just levelling the playing field for everyone else. What is wrong with fair competition?
I’d argue the BoE governor is correct to talking about wage restraint. He knows that it’s only wage rises that really lead to sustained rises in core inflation. Right now, it’s primarily just a supply shock, and will pass, but if it feeds into wages and inflation expectations, then it’s all over for the economy. Higher costs, low productivity, priced out globally. It’s nailed on stagflation and the BoE will be forced to ramp up rates into that.
Reading debates like this I always find myself reaching for the ‘upvote/downvote’ button and being frustrated 🙂
I’m in the camp too of emotionally having moved on from Brexit, it really tore me up for years. It still affects me directly more than most as a frequent traveller ( I now have a spreadsheet counting my schengen days – pathetic).
Re: the UK in general I think @cat793 raises an excellent point about the wealth/income divide. I’m in my late 30’s and feel like I just about got on the right side of the drawbridge – one of the last to pay only £1k a year for my student loans for example.
I don’t know how even well educated young people can make a good life in the UK without huge parental financial support these days. They have whacking great student loans at high interest rates to pay (or treat as a tax), and if house prices were high 10 years ago, what about now? Meanwhile, policies continue to favour the older generations i.e. short term vote winning rather than what the country actually needs.
I have no idea how, but I see this as a bit of an underlying bubble of resentment that could explode very suddenly. I see it on social media in glimpses – people who are at the point of wanting to start a family but can only just afford to live in a houseshare, and rightly being angry about it. This is again not just a UK issue.
Re: politics, I’m amazed people can be only just changing their minds about BJ. He has literally been exactly like this for his entire life according to all testimony. It’s probably not a stretch too far in my view to say that if it wasn’t for him and his lies then Leave wouldn’t have won, remembering how influential his columns about bendy bananas were as well as his influence in the vote itself. I find him to be an absolutely despicable character, void of any moral fibre.
I don’t even care whether the Conservatives or Labour govern. I would just like the Government of the day to actually start to deal with some of the issues we’ve all been describing rather than what they’ve been doing in the last 6 years+ of deeply damaging melodrama.
A fantastic article today TI, your best for ages. The spotlight must continue to be shone on the idiotic behaviour of this government until hopefully, sanity resumes in the country. However, things look rough now, will continue that way for the next year or two, and the ordinary people are the ones that will pay the most. Seems a shame that people don’t remember the 70s – everything going on now looks exactly like it again, with an added touch of a narcissistic sociopath running the place.
‘Europe looks suddenly lightweight’
Hmmm, I could have sworn you thought pooling sovereignty was the only way to assert influence in the world. At least on that you’ve finally come to see the reality of the EU.
That was big and brave to admit you were wrong. I note you haven’t quite come to admit that labour isn’t the only commodity in the world without a link between supply and demand and that wages have risen.
I look forward to that in the next rant. One at a time, realisations we’re better off.
@TI Bravo!
You have articulated my own thoughts on Brexit and the current state of Politics. You live the capitalist dream but as soon as you show your worries for your fellow man or woman you are labelled a leftist or god forbid ‘woke’. As you state, you don’t even have kids (or their dependents to worry about) but you are a communist for raising climate issues.
Let’s face it until a largish segment of society admit that they only voted Brexit due to their prejudices we will continue this merry-go-round of voting for leaders who echo such ignorance…Trump anybody?
Whilst we vote for politicians that only have their own (financial) interests at heart via the lobbying system and promises of funding and a job post-Parliament we will always have politicians that society deserves. As a Brucey Bonus they will drape themselves in the Union flag for a few more votes.
Cost of living looks likely to rise for the rest of 2022 and I have no doubt the boat people in the Chanel will be the ‘fall-guys’ for this with some in society and certain politicians who will jump on the bandwagon, such as their logic.
Keep up the good woke, sorry work,
Lee.
@Zxspectrum
The fact that 2 out of the last 3 prime ministers went to the same secondary school and four out of the last five prime ministers went to the same university is actually pretty good proof that the game is rigged against them
Basically your whole post could be paraphrased as ‘know your place serf’
Someone working as a driver for Amazon, Deliveroo or Uber might have a different take on technology being a great leveller
If anyone thinks it’s a sh&t show – how about becoming a conservative party member and then, relatively speaking, having an actual influence on the direction of the country. Just costs £25. BJ’s main sustaining advantage is according to the last YouGov poll 60% of the membership wanted him to stay in situ. It’s why Gove will never be prime minister. The membership dislike him – as do I…. I always find people who moan about there being no choice between BJ and Corbyn showing a fundamental lack of understanding of how our politics work. A very very small section of our society (in the conservatives case – average age circa 60ish / brexit leaning etc etc 150k people) decide on who we get to vote on at a general election – it’s about 850k across the three main parties. Become a labour party member as well. Then tell them your views and vote accordingly. No one cares much how a lot of people vote in an election as a lot of seats are ‘safe’.
It’s useful to understand which direction the country is heading so you can understand the safety net is getting weaker – greater need to have private health care, greater need to provide for your own pension, greater need to afford to live in a house in a safe area as policing is cut back – ditto good schools. You can blame who you want but it won’t change the direction of travel.
We have a much higher standard of living globally than many other countries and no inbuilt right to do so.
Hence why the FI component of FIRE is of ever increasing importance. Unfortunately the majority of our society have no scope to achieve this and are going to be increasingly upset. Fortunately I’m ok jack excluding a russian revolution type disaster….
One one level there’s a lot to like about No Free Lunch’s attitude.
I’m a believer in climate change – but with the UK amounting to 3% of carbon dioxide emissions that is falling to 1% over the coming decades, the main action is increasingly not here. The UN forecasts Nigeria will have circa 800 million people by the end of the century, Lagos will have more people than the entire UK……that’s a lot of carbon emissions – nothing against Nigeria, just picking them out as an example. We’ll be increasingly an irrelevance and not just for climate reasons. They’ll very likely follow the same demographic trajectory of other countries that went through industrialisation earlier with world population stabilising around 11 billion. Looking at the data and the gross cost to achieve net carbon zero (for the UK alone I understand it’s estimated at over a £1 trillion currently) – climate change is going to happen. None of which is any excuse not to achieve energy self sufficiency and to plan.
Wow that’s a depressing Weekend Reading. Sadly all true.
I consider Brexit a consequence of a phenomenon I think of as the “Rise of the Fantasists”. Believing that erecting trade barriers will boost trade and other Brexit fantasies are minor in comparison to Biden stole the last election (a frighteningly large number of Republican supporters believe that), Climate Change is a hoax, COVID-19 vaccinations make you magnetic, Hilary Clinton heads up a cabal of Saten worshipping paedophiles, etc. Rational arguments simply have little effect on people who believe such garbage and unfortunately a lot of these fantasists are infiltrating and influencing political parties, mostly on the right for the moment, and actively discouraging rationalism and truth. The hard left have their own set of fantasists of course, but they are not quite so damaging at present.
Despite my feelings on the utter stupidity of Brexit and the resulting lamentable trading relationship with EU countries we have ended up with, I see a danger in continuing to bang on about it. It just hardens the opinions of Leavers if we keep rubbing their noses in the subsequent failure and broken promises. We are where we are. The best we can do now is push to improve our relationship and reputation with the EU, the US and around the world. Don’t give up on rational arguments, quietly stand up to fantasy thinking and put forward positive ideas for improvement.
Some people have gained out of Brexit other than bureaucrats by the way. Tradesmen where we live are hard to get hold of and all seem to be charging a lot more than before Brexit – not just because of the increase in the price of materials either. I have read that lorry drivers pay has improved as well. I am sure there must be other skilled workers that are in demand and have been able to increase their pay as a result. Not great of course for those wanting to use their services!
Looking on the bright side
– Covid-19 has become a disease no worse than flu for most people due to vaccines, prior infections and treatments
– Corbyn risk has gone
– The daffodils are coming up
– Sailing season is starting in a month
– One of my kids has just won a £550k government grant for her biotech start-up
– Thanks to stock market growth my family and I are well positioned to cope with the idiocy this government and the World will throw at us.
Thanks for posting, I felt like it was me saying this as I read it. So whilst it wont solve anything its good to sometimes just say what you think. My, we the UK are in a sticky economic place, the good parts of the economy gradually getting weaker due to the difficulties of trading. The tax take getting higher along with the debt payments. The EU feeling stronger since we left and if things continue will eventually squeeze out more parts of london finance over the next 10 years. So whilst the economy might not be close to peoples hearts if the pie gets smaller and smaller something unpleasant will happen.
The rant does feel like a ‘I told you so’ piece and you are breaching to the converted (I suspect) so not sure what it adds. What would be helpful is your view on, now we’re in this mess what are we going to do about it? Personally I no longer have any investments in GBP, and don’t hedge, you only have to look at the currency over most medium periods and I’m on the right side of the trend, not very patriotic admittedly. My home is in an area attractive to foreign buyers so again not reliant on the domestic outlook.
It’s a shame it has to be this way but I can’t change what has got us here…
Wow. And still you seem to have no clue as to what the purpose of #CoNvid and the #ClimateHoax are for? (so many personal investment pundits get it… so why not you?)
I’ll come back in a year to see if you’ve woken up.
Thanks for everything though (I mean that). You & the @TA are the reason I discovered investing.
Great article – thank you.
I can’t resist the temptation to say, my only confusion is that you didn’t use state of the nation as a subheading.
“With this there’s pretty much nothing, except fewer economic migrants from the EU, who seem to have been replaced by RoW migrants anyway.”
Such a sweeping generalisation – you need to get out more and see and speak to more people. Most new immigrants are filling gaps in NHS from RoW which wasn’t possible before as EU migrants weren’t qualified and they were indirectly blocking hiring nurses and doctors due to quotas on RoW pre-brexit.
But then let your bias and ego spoil your rest of good contributions on investing.
“Also, as I have had to remind people for years I never said Brexit would be an overnight car crash“
Here start the excuses…
@cat973 & zxspectrum – great posts. But then why bother when the ego of TI will just keep him clinging on to his bias forever. He had a good point of calling out the xenophobia after brexit, but confusing it with economic factors and data is just laughable. It’s like saying all American people are idiots and their opinions pointless just because some are gun toting radicals. Am sure he’ll still produce some research that immigration had no impact on wages.
@Naeclue (#55):
If you have the time, IMO this series is well worth a listen:
https://www.bbc.co.uk/sounds/series/m001324r
Having largely ‘got over’ Brexit, I am loath to contribute this this session, but the asterix on the Trade Flows chart got me delving into the latest Eurostat figures for trade.
https://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_151969.pdf
For clarification the ‘main countries’ in your chart is only Germany, France, Italy, and Spain i.e. 4 of the 27 EU members. ‘Trade Flow” is imports and exports.
Eurostat shows an increasing trade deficit since May-21. The EUs trade surplus on manufactured goods (+293Bn) largely wiped out by its need to import raw materials and energy (-273Bn). Its primary exports were vehicles and chemicals.
These figures leave me very conflicted. Here we see the economics of the green revolution in the raw. It boasts its high morals yet demands ‘dirty’ energy and minerals from undemocratic countries with poor human rights. Meanwhile, my 83yr old mother is terrorised by her smart meter largely thanks to our governments suicidal North Sea E&P policy.
Great financial blog with political overtones-it is a synchrony after all
1)Were Britain and Germany the only net contributors to the EU?
What happens when one financial prop goes?
2) Listening to the other half of the population who may not agree with you is a good idea-politically -or things can go terribly wrong very quickly One of the scenarios where this seems to being currently being played out is in Canada
Workers (Truckers) versus the Intellectuals
The Leader of the country has run away -the workers ie the people are called “terrorists” etc etc
Is there a political as well as a financial reset going on?
xxd09
An interesting test of your beliefs is to ask: “What evidence would I accept that the other side is right, or even partially right?”
I voted against Brexit. But I’d be happy to read credible evidence that it’s improved our economy, opportunities for people in this country, inequality, standard of government, and ability to address the many challenges we face.
Please point me to some.
@Al Cam, thanks for the link. I have listened to the first episode. Very entertaining. I do think Trump has exploited the fantasist movement well.
@TA, I agree and I think it important to recognise where there have been benefits. I just wish the other side would have the same approach and recognise the downsides, failings and broken promises.
For example, I do accept that some groups may have been able to push up there pay more than would have happened if the vote had gone the other way.
Personally the only benefit to me personally has been a mixed one – the fall in the pound has increased the value of our equities portfolio. OTOH, it has contributed to inflation.
I’ve always seen this site as a personal blog, or rather a collation of personal blog entries from a group of contributors with aligned goals and interests.
I personally enjoy reading author opinions, as I feel they give wider context to the other content on the site.
People complaining about TI’s politic views should take a step back and consider that this post, along with all the super valuable links therein, probably took him hours, or even days, to write.
There was a warning at the top of the article. If you don’t like it just suck it up and scroll down to the links section and stop trying to turn this site in to something sterile like MSE.
Well said! Brexit is indeed a slow puncture in our bicycle tyres, gradually letting the air out of our economy, and (just as importantly for many of us, money is not everything) a very great cultural and emotional wound as well: no longer do we have the right to get on our bike (as someone once said) to live, love, work, study (or retire) anywhere in our lovely continent, and we have collectively damaged the trust of our friends (it is a credit to those friends, and possibly it is only the residual acknowledgement of the thanks owed to us (and other allies) from long ago for our country’s efforts and sacrifices in the, beloved by the flagshaggers, “glory days” in WW2 (that none of them were actually alive during) that we haven’t lost their trust entirely).
Our friends would, sadly, be right to be wary of allowing the UK, in its current shambolic political state, to rejoin the EU (although perhaps at least 2 countries of these islands do have alternative routes available), but it surely must be clear that in the short-medium term, rejoining the Single Market and Customs Union must be sensible steps forward to reduce the negative effects (ever growing lorry queues being just one of them).
It is also good to see the problem of climate change being raised as an important concern in the article, but somewhat depressing to see a number of comments here talking it down: the science has long agreed that it is a major concern, and fortunately many companies have been starting to take steps to reduce their environmental impacts for at least a few years now. I can only hope that such comments only represent a small and shortsighted minority (isn’t investing supposed to be about keeping an eye on the long term?). After all, we simply won’t have prospering economies and decent standards of living if we end up making our planet more uninhabitable for ourselves. The increasing numbers of major wildfires, heatwaves, floods, etc, are warning signs which we cannot just ignore.
I’m with @far_wide on the income/wealth divide in Britain. It’s going to be a huge socially dividing issue in the coming decade.
Higher interest rates, higher taxes, and fewer tax reliefs. Asset prices out of control. It’s going to get ugly.
I live in London In hindsight I should have over-extended myself 3 years ago and bought a good 1 bed flat when they were merely £600K. I’d be sat on a mountain of equity.
Why does nobody ever mention how bad crypto is for the environment? It’s fucking criminal.
At least we can use coal for heating or to light fireplaces at Christmas, so that the flipping antique (useless waste of space) fire guard can get used once a year. Crypto? It’s stupid for the most part, and the only utility value it can legitimately claim is to finance cyber criminals.
Help the environment by divesting fossil fuels? I say divest the crypto first.
Thanks @TI, a great rant and fully justified.
While I realise not everyone agrees with you (and me) the inescapable truth is that Boris Johnson led the campaign to leave including all the related lies, and he and his Conservative Party (with yet more lies) determined the precise nature of leaving. They can’t blame the EU.
But the key question now is how can the country make the best of the situation, not bicker about what could have happened in a parallel timeline? For Johnson it is about continuing to blame the EU for something they were in no way responsible for. That’s not going to get anyone anywhere.
I think the answer – which to be fair neither main party is prepared to say – is to accept that we can’t both have the cake and eat it. Some things have been a disaster, most notably the huge obstructions to trade with our major export market. Perhaps we need to agree that food standards will stay aligned, possibly with a slight fudge, so that veterinary checks etc can be abolished. And similarly other issues that lead to excessive red tape for exporters. There might be some tricky negotiations – which to be honest are on things that should have been agreed from the beginning – but it would be good to end up with a functional trade relationship again.
But I can’t see any optimism over overcoming Johnson’s effective personal campaign for splitting up the UK and losing both Northern Ireland and Scotland.
Thanks for the comments (nearly) all.
Personally speaking, I could get behind a “time to move on” push if we had reasonable politicians who stood up and said “yep, it’s a real shame we’ve left the EU, but we are where we are. Now let’s see what we can do to ameliorate the damage with a sort of national emergency / crisis management posture for the next decade.”
We’d accept that we’re going to be poorer, that we can’t enjoy the freedoms we had before etc, and we’d then methodically and tediously work through every bottleneck that Brexit has introduced to try to find the pain points and surgically address them in a workmanlike fashion to ease the burden on trade and industry. It wouldn’t feel fun and it wouldn’t be glamorous but it’s what’s needed.
Instead though we have the ongoing Alice in Wonderland fantasy of a ‘Brexit dividend’ and a ‘Brexit freedoms bill’ and all the rest of it while the Union crumbles and trade suffers. It grates and it doesn’t encourage one to bury the hatchet.
If I was tasked with genuinely having to “make the best of Brexit” — rather than my preferred route of “salving the worst damage of Brexit” — then I suppose I’d probably don the mantle that @Neverland assigned me earlier in this thread of right-wing libertarian nut job.
Regulations and whatnot would be cut to the lowest level we could get to whilst still having access to the all-important EU market. This would obviously be to the detriment of our own workers and environment to some extent.
I would then slash corporation tax, probably to zero (which I am actually minded to do anyway). I would dovetail this with economic zones and other incentives to encourage foreign direct investment. I’d heavily cut capital gains and income taxes. I’d look for ways to boost in particular the City of London, by far one of strongest assets, to stop the drain of business to Europe’s financial centres and hopefully turn it around.
The aim would be attract tens of thousands of bright immigrants from places like India and China to set-up businesses here rather than in Silicon Valley with a ‘you can get truly rich here’ message that had some actual regulatory structure behind it.
I’d similarly try to create incentives for people to bring capital to our country rather than the much larger market next door, by enabling them grow faster and keep more of what they earn (the lower tax rates etc).
Brexit directly hinders some of the UK’s other strong industries, most especially the creative sector, due to the lack of freedom of movement, but I guess others might be salvaged by incentivizing really smart foreign people to come and work here (e.g. pharmaceutical sector, tech sector, perhaps defense).
Obviously all this would probably increase income inequality etc. Most people would be worked harder. And it’d feel even worse in the short-term because to finance all these tax cuts etc you’d have to cut state spending pretty heavily, albeit trying to avoid the worst of it by continuing to borrow hard while rates are low. Perhaps if the economy did boom you might eventually make some of it back via a smaller take of a higher base.
Fact is though if you’re going to choose to opt-out of a vast friction-less market based on mutual cooperation and the best trade deals made with 700mn people at your back, you need pretty extreme measures to make up for it.
So safety nets would have to be trimmed or removed to a bare minimum. People would be enabled to earn much more, at the cost of having to look out for themselves more.
You’d have to try to contain the damage from losing bright children (because they’re your future money-spinners) due to a worsening state education, growing poverty etc, via various kinds of streaming systems that pluck out the brightest 20-30% (similar to grammar schools) and leave the rest to be cogs in the machine.
Do I like that? Of course not. But at the end of the day you can’t have a globally ultra-competitive tax system with a massively flexible and cheap workforce whilst also aspiring to Scandinavian levels of social spending, so something would have to give.
So you’d attempt to really let capitalism rip, perhaps making the top 30% a lot richer at the cost of making the bottom 50% much poorer, relatively and perhaps absolutely, and hope that in 20 years you’d be strong enough to maybe start to repair some of the damage.
Of course some of this could have been done within the EU, especially low taxes, if people were so minded, but there does seem to be more scope for lower regulation and worker’s rights etc outside of the EU.
Our expensive domestic workforce is a huge problem, even if you cut the cost by getting rid of some rights and protections etc. Still, why would foreign capital do this here and not Vietnam, say? The brake on immigration is a big hurdle, too, partly because immigrants work harder on average (they are self-selecting go-getters) but more so because the UK has always had a low-skills problem and this is hardly a recipe for fixing that. So you’re likely to have skills shortages that you’re going to have to directly plug with incentives, quotes and bungs etc.
I’m not saying all this would necessarily work. But it is a playbook with form, albeit with different nuances in different instantiations.
It’s essentially the mooted Singapore-on-the-Thames model, although even that’s not a direct analog as the Singaporean government does provide some benefits we don’t, including widespread subsidised housing for its citizens etc.
Most countries who have gone down this route started poor, so they’ve little to lose. Richer countries trade competitiveness for moving up the value chain (which we would aim to do, of course) and greater social protections. As @ZXSpectrum48k says we’re already a rich country so why would we want to inflict the pain? But then we voted for it so ho hum.
Needless to say (a) I wouldn’t take this job and I didn’t vote for this outcome and (b) it’s not what swathes of Leavers voted for either, especial those whose one-of-the-many-reasons for voting Brexit was because they somehow thought it would lead to more social spending etc (the £350m for the NHS etc etc nonsense).
Then again so many fantasies were indulged by and projected onto Brexit that it’s a case of pick your poison who you piss off. At least this is a logical way to “make the best of Brexit”, which is itself a mild oxymoron.
(And I’m just typing this off the top of my head of course — it’s not a fully-fleshed out economic plan with costs and benefits etc, but then Leave didn’t have one of those either so I think I’m doing it right, right?)
There is a far easier ‘making the best of Brexit’ playbook that is also consistent with the choice we’ve made.
It’s to shout slogans, directly pay grants of £1m from Whitehall to regions that used to get £1.5m and then say they’re benefiting from the UK “leveling them up”, cheer a new Japanese car factory representing £1bn of investment that would have been £2bn if we were still in the EU, wave lots of Union Jacks around so the Brexit-minded feels special, and generally slap ‘Great Britain’ onto as many things as you can in your retreat into some geriatric island fantasy.
Not so much Singapore-on-the-Thames as a Poundshop-Pyongyang.
I agree with all you say but we/you didn’t manage to convince the majority
In a democracy that’s what counts
What do we do now?
We need to find a constructive path out of this situation that we find ourselves in
We more light and less heat
Helpful suggestions please!
xxd09
@xxd09 — That is my idea of a helpful suggestion. 🙂
i.e. I am completely aware, as I’ve said before, that there’s a post-Brexit economic model that might ameliorate the damage from Brexit while somewhat taking advantage of Brexit. It’s the one I’ve outlined.
Most of the government’s ‘plans’, such as they have ever been seen, are either slightly worse trade deals / inward investment / regional funding to replace the existing model etc, or they are things we could have done anyway irrespective of Brexit, such as redistribution.
Brexit is a win for max technical sovereignty and the potential to lower immigration.
Our choices for paying for that ‘win’ is one of:
(a) be definitely a bit poorer but presumably thinking it was worth it
(b) be potentially a bit richer but ‘less European/EU’ and more ruthless and competitive
(c) realizing it wasn’t worth the heat and rejoining the EU, which is what anyone neutral tasked on the maximum easiest win for the widest swathe of the British economy would do, starting from our geographic, historic, and developmental position.
With Poundshop-Pyongyang seasoning to suit.
There isn’t a silver bullet where we have cheaper workers than SE Asia, or it’s less expensive for us to ship to India, or we can make cars more efficiently than the Germans for no apparent reason because we’ve left the EU.
We can cut regulations and other rights that cost money to be more competitive (making the best of Brexit) and we can go full-tilt capitalist (could have done much of this without Brexit, but it’s an emergency rip cord).
Brexit-supporting politicians hailing a new factory and waving a flag is not a competitive advantage.
agree with the vast majority of the original post, but then you go off the deep end at #72!
“expensive domestic workforce” – tell that to the millions who have to choose between heating and eating, those stuck in the gig economy etc.
The cheek of that c++t at the BoE telling people not to ask for a pay rise – easy to say when you’re on over £500k per annum.
@MG. We are an expensive workforce on a global scale, especially once adjusted for productivity. The issue is not that we don’t get paid enough. The issue is the cost of living is too high. People should not be demanding pay rises. They should be screaming for a reduction in the cost of living but they don’t. They want to be paid more despite that will eventually price them out of a job.
@TI. I agree with most of what you say but don’t you just feel it’s pointless? The Great British Public is very consistent. It’s consistently votes against it’s own interests. It consistently votes for cakeism and boosterism. It’s votes to be lied to on an epic scale. Cue Tom and Jack in a Few Good Men: “I want the truth” … “You can’t handle the truth”.
@MG — If we’re radically repositioning Britain’s commercial positioning in the global stage, as with Brexit, then we have to look at our international competitiveness. The cost of labour is one of those metrics.
Depending on how you measure it (e.g. median versus average) the UK is the 15-20th most well-paid workforce in the world by country, so say top 10%.
Due to population skews we’d be far more expensive (from the perspective of global capital etc) on a per person basis, of course (e.g. there are over a billion people in China and in India). Probably top 5% though I haven’t done the maths.
Anyway top 5-10%. That’s expensive, no? 90-95% places have cheaper workers (albeit it often less educated etc).
According to the OECD, Mexico is 35th on the list. Mexico is an advanced emerging economy, with a well-educated labour pool, a strong manufacturing sector etc. Their average salary is less than HALF ours. And again, we’re only at number 35 with Mexico. We’re not even talking about emerging South East Asia.
As we all surely understand after the lockdowns etc, it’s getting ever easier to hire, say, a programmer in Hyderabad instead of Hull. Technology has been doing that for years.
And outsourcing is the awkward end of the wedge. What’s much easier is for an Indian software company to just create and ship the product directly, and for it to reap the profit. That’s globalization, for good or ill.
The global economy doesn’t care about myths peddled by Brexiteers. Outside the EU we’ll mostly do well in what we did well before, with a bit of Brexit friction etc. We will not be building ships in Tyneside again.
Another vote for the occasional Brexit fallout blogpost. I think its relevant to investing and is in line with the whole point of this site. I’m also with TA, I’d like to see evidence of the benefits we’ve won and perhaps an evaluation on whether they have been worth it compared to what we have lost. Maybe its just my echo chamber (definitely something I’m aware of) but genuine wins from Brexit seem very thin on the ground. What are you so happy about?
As I age I must say I have more and more faith in the great British public to get it right -certainly more than the current crop of leaders
They are a lot more sophisticated than our elites give them credit for
In a court of law I would certainly prefer a jury of 12 to any other system
Another small example of their “nous” happens up here in Scotland where the electorate constantly keep the Nationalists in line with tactical voting
Imagine putting in power SNP politicians (who by definition are Scottish-Scots prefer their own!) and then denying the said politicians their raison d,etre ie independence
Clever stuff
xxd09
@ZXSpectrum48k — Yes, it’s probably pointless. As I said earlier in the thread I feel some compulsion to make my tiny contribution to holding the project to account. Perhaps I’ve just read too much history to be complacent.
But there’s no personal gain in it. Lots of middle-aged investors were Leave voters, as were many of the (shrinking!) pool of older richer investors. So it’s been a bad look for the site.
I’ve also had big rows with family members in the provinces — as recently as this month. They aren’t racists or English nationalists — they fell for the resurgent 19th Century Britain spin.
They’ve got worse than nothing to show for it, we’re going backwards (weaker GDP etc). It’s early days and the pandemic hasn’t helped at all, but obviously I don’t see any Brexit dividend on the farther horizon.
Rather than admit it was a mistake, to @LALILULELO’s point they seem to be doubling down on rhetoric. They can’t point to anything meaningful to balance our worse trade posture, let alone the huge tragedy of us giving away the freedom to live and work anywhere in a rich and varied continent of 700m without hurdles. (Or just retire to Spain on the cheap).
So it’s all “we should make the best of it!” and no substance and shouting when you ask how.
Closing comments here as experience shows these Brexit threads end up having a long-tail of increasingly rude / content-free comments that need moderating.
Thanks again to (nearly) everyone of all sides for the discussion. Have a great week!
p.s. Appending this news story here for posterity, given a few people seem to think I’m unduly concerned about the UK’s political direction of travel. Happened a couple of days after my post.
https://news.sky.com/story/keir-starmer-mobbed-in-street-by-protesters-as-police-escort-labour-leader-to-safety-near-parliament-12535748
If things do turn proper dark in our politics, nobody can say they weren’t warned.