Brexit & Futures People Won’t Look At
This piece contributes to#NoDust on #Brexit, an experiment in civic conversation. Join us at Conway Hall on Sep 5, 2016. #NoDust is not-a-panel, not-a-debate, not-a-launch: it’s an experience for anyone ages 12+ who’s been affected by the #EuReferendum or its aftermath. Free for under 18s, affordable for all. Info here. Tickets here.
As someone who tries to help organisations look to the future, the ongoing debate around Brexit was almost guaranteed to give me ulcers. After all, politicians who have made promises rarely have any interest in admitting flaws in their schemes and political commentators tend to shout down discussion of scenarios with the well-worn phrase “the people have spoken”, “stop talking Britain down” and “we have to make the best of it.” Throw in pro-Brexit economics commentators confident of a bounce “back to trend” following “short-term turbulence” and you have a perfect storm which focuses people on only considering a very narrow range of scenarios.
Facing up to ugly scenarios
There’s also something in the way human beings are wired that makes it hard for us to look at long-term problems. If there is no immediate crisis we tend to lose interest. The problems of global climate change are the most obvious example of this.
Yet, it is incredibly important as we try to plot a way forward that we acknowledge that there are some paths that really do end badly. The “Leave” vote specified almost nothing about the critical negotiations that are to come.
In this short piece I’m going to focus on just one, quite likely, but ugly path that may result from the current thinking on Brexit.
Hard Brexit Rising
Whether it is “taking back control of immigration” or “taking back control of our laws” there has been a drumbeat from the Brexit camp for what is termed a “Hard Brexit.” In essence: withdrawal from the single market and relying on WTO rules while new bilateral trade deals are negotiated with countries around the world.
So what might be the problem?
Now this kind of deal has plenty of prominent supporters, who forecast that it will lead to a new prosperity for the UK. Why might I think it could turn out differently?
First, a number of important export industries will suffer a severe shock if we leave the European Single Market. The one every talks about it is of course the financial services sector. Absent a “passporting” deal (which the EU currently suggests will not happen through bilateral deals) firms based in London will no longer be able to sell services across the EU. This is a significant issue because the industry supplies around 10% of total tax paid to the UK government. Another key sector would be manufacturing plants that export a lot to the EU (e.g. Nissan in Sunderland, Toyota in Derby, Honda in Swindon) who create a lot of employment in their locales. On top of that is the growing importance of other services industries (including media, education, leasing of heavy goods etc.) to our economy. We might even add in various agricultural exports (soft fruits!) that rely on both EU workers and EU markets.
Now of course, none of these sectors will just disappear because trading with the EU will get harder, but it seems critical to recognise that in each case, if the majority of business is done with the EU, then some of the “production” is certain to move out of the UK when the UK leaves the single market. As these are significant employers and contributors to our economy at a national and local level, this might well be a significant shock to our economy.
So what if there is a shock?
The economy has had shocks before, what’s the big deal, even if this one is a big one? To understand why this might get ugly, let’s look at a region I know well: South Yorkshire.
I grew up in South Yorkshire, near mining villages and famous steel plants. It’s well documented that these traditional industries were already having troubles, but the early 80s saw the application of a “shock therapy” partly motivated by the politics of the day. These industries went through a rapid decline. What economists predicted, as the Brexiters expect for the UK, was a return to trend. Surely new industries would come in to utilise the potential workforce and the new space for facilities? Of course, some companies did come in, but in fact, overall, the original levels of economic activity have never returned.
It punctures a natural pride to say this about my home region but despite a strong identity, actually it isn’t that special. The people are a mix of lazy and hardworking and have various other virtues and vices. The ecosystem of industries was built around natural resources which are no longer important. As a result, there’s no particular reason to bring new industries there. Rather they have sited close to transport links with important ports or close to London (where a large proportion of UK economic activity is centred.)
Region as microcosm of Nation
If we are as cold-heartedly focussed on the bottom line as most international businesses, we must consider that this story of South Yorkshire could well be the story of Hard Brexit Britain. We’re an island off the coast of Europe, with a mix of hard-working and lazy people who have a fairly typical set of virtues and vices. If we throw up barriers between ourselves and the closest markets, businesses will choose to locate on the other side of those barriers. If we assume that we’ll make good trading with far-away nations, we’ll be competing with places much closer to those markets and it won’t be easy — and candidly the chances of success are not high.
A scenario worth taking into account
I’ve outlined a scenario where Hard Brexit leaves Britain as a country in decline, an international backwater of no particular interest. It is not the only scenario, but it is the one that is getting least attention. Given that we’ve seen this series of events before in microcosm and given the seriousness of the outcomes, it needs to be part of the conversation. There is a blithe “it’ll work out” attitude spreading across the thinking about Brexit. Ironically, it very much matches the blithe “Remain will win in the end” attitude we saw before the vote.
This needs to change. We need to recognise that we are risking future prosperity and status. Many on both sides lay claim to patriotism, but true patriotism involves putting the future of the country first and we can only do that if we acknowledge the risks we run — and measure the benefits we are promised against those risks.