Theresa May’s Brexit moves from tautology to oxymoron but makes the best of a bad job

An oxymoron replaces a tautology. Theresa May, the British Prime Minister is contemptuous of intellectuals that try to weave policies into a wider, coherent narrative. Instead she concentrates on a series of tasks, whose solutions may clash with one another. In her speech on Brexit last Tuesday Mrs May moved her defining slogan on from “Brexit means Brexit” to “Global Britain”. This last expression captures the essential idea that Britain can remain open to the world while being closed to it.

Predictably enough, the media coverage has been beside the point, lapping up the bait left for them left by the spin-doctors, without bothering to question the speech’s real meaning. Last week I said that the government’s strategy would be a hard Brexit via a soft one, with a General Election in between. That, more or less, is what this speech delivered.

The media has focused mainly on Mrs May’s stated destination after the exit process is complete. That was always going to be a very hard form of Brexit, given her insistance on two red lines: control over immigration of EU nationals, and escape from the jurisdiction of the European Court. This is a perfectly fair interpretation of last year’s vote. Some Brexit campaigners painted a picture of a “Norway option” of Britain staying in the Single Market while outside the political Union. But Remain campaigners, including me on many occasions, pointed out that this was nonsense. Mrs May is conceding to this obvious reality. A third red line is emerging: Britain wants to be free to negotiate separate trade deals with non-European countries, like the USA or China. So one of the main points interest of her speech was her hope that Britain could have a half-in/half-out relationship with the EU customs union. This looks very hard, but we can hardly fault it as an aspiration.

But, as I argued last week, the critical issue for Brexit is the transition, and Mrs May did have something to say about this. She talked of a “phased implementation” of Brexit: in other words, a transitional deal. She said very little about this, and nothing about how long the transitional period would be.  That is quite a big door she has left open.  This transition amounts to a soft Brexit for a limited period, and getting progressively harder over the years. This starts in 2019; there must be a General Election by May 2020, which will be quite early in the transition process. Politicians should be focusing on their stance in this election.

The strategy for Remainers who want to put off hard Brexit therefore becomes quite plain. The next parliament must prolong the transition process and renegotiate what comes afterwards. They will be caught in the same logical bind about membership of the Single Market, but they might be able to move the talk on to eventual re-entry.

But to reverse the tide of Brexit will require a shift in public opinion, with a large block of Leave supporters put off by the prospect of hard Brexit. At the moment, though, the acquiescence of Remain supporters looks more likely. This is helped by the behaviour of the UK economy since the vote. There is no sign of a serious economic impact, and forecasters are putting off their predictions of one. The chief economic effect of Brexit has been the lower pound, and this has been doing the job that advocates of floating currencies always maintained it would. Any loss of inward investment put off by Brexit has been made up for by other money tempted by the reduced price of British assets. It may be that property speculation is replacing business development and research, but in the short term what matters is the cash. And British consumers have seen no need to save more and spend less; consumer demand is robust. The balance of payments deficit may even be easing. My sense is that summer holidays in Cornwall are selling faster than usual. Britons may be worse off, but not enough for anybody to be seriously worried.

This is something of a Brexit honeymoon. When will it end? That will happen when, or if, the costs of exit become more concrete, with job losses and travel restrictions in particular. The government will, as it should, try to put these off. There will no doubt be a big focus on protecting the British motor and aerospace industries, which are particularly vulnerable. Skilful navigation of these pitfalls could head off any serious backlash – and if they do the Brexiteers will have won the economic argument, so far as most people are concerned. That may or may not happen, but for now the endless speculations of doom from the Remain camp aren’t helping; it will the fate of real businesses and jobs that will win the argument either way.

But for the time being the focus will probably move away from business. The immediate focus of negotiations will be the terms of Britain’s exit – the divorce settlement, and not the basis of the future relationship. Probably the most combustible part of this will be the status of Britons resident in other EU countries, and vice versa. So far such media attention has focused on people from EU countries living in Britain, who have become embedded in British society. Most Brexiteers feel that they should have full residency rights, but the ability of Britain’s bumbling Home Office to design a bureaucratic process that can deliver this is very much in doubt.

Actually the more politically important case is British retirees who have moved to other EU countries (Spain is especially popular) and dependent on access to local health services. The government hopes that people who moved before a cut-off date (such as the referendum date) can preserve their current status. But the situation is not symmetrical, especially when you look at individual EU members. A deal should be easy with Poland, but what has Britain to offer Spain in return for continuing to look after a community that pays few Spanish taxes and demands increasing care costs? The prospect of thousands of British retirees coming home to use an NHS struggling to recruit foreign staff cannot be inviting.

It is with such matters that the British government will become absorbed over the next two years. It will be a hard slog, but Mrs May’s plodding, practical, task-oriented, anti-intellectual approach may be just what is required. Expect many more tautologies and oxymorons.

 

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8 thoughts on “Theresa May’s Brexit moves from tautology to oxymoron but makes the best of a bad job”

  1. One point: consumer spending is high, but so is consumer debt. We borrowed loads over Xmas. Watch is quite mad as borrowing rates are almost certain to go up as inflation and weak pound bite.

    1. Yes, even before December credit card debt was growing as over 10% pa. Absent robust wage growth – which seems unlikely – there is going to be trouble ahead.

  2. Yes I think Martin Gentiles has it right. It is consumer debt, or more generally private sector debt, which is the longer term problem and that’s nothing to do with Brexit.

    The fall in the value of the pound, will have provided some short term respite. A lower pound will mean that imports and exports have to move closer into balance. That means that the same level of govt deficit will provide a greater stimulus to the economy.

    It is private sector debt which is the problem. The best analogy I can think of is the government providing a certain amount of heating fuel, say it’s gas, to every household. If it wants the average temperature of the households to rise it can simply provide more gas. But if it doesn’t want to provide the gas it might encourage households to borrow more gas from gas providers in the private sector.

    So temperatures will rise when the households start borrowing the gas. However, unlike the gas everyone receives directly from Govt, this borrowing has to be repaid (ie gas returned to the PS “provider” and with interest. So after a time the households are running cooler than they would have been had the borrowing not occurred. Steve Keen makes the point that private sector borrowing is only stimulatory when borrowing is accelerating. So we need more private borrowing now to compensate for too much private sector borrowing previously.

    It’s not a stable situation! It’s the govt which needs to provide more gas. BUT, no doubt when it doesn’t and we do see the economy cool it will all be blamed on Brexit!

    1. There’s no doubt that public debt has quite different macroeconomic implications to private debt. Interestingly I recently read an article by one of Shinzo Abe’s advisers about this. He gave it a fancy name: “fiscal theory of the price level” (FTPL). The new monetarism is gaining ground over the establishment inch by inch.

  3. I’d have thought the phrase “Brexit means Brexit” is just repetition rather than tautology. Just a minor quibble.

    Is the phrase “Global Britain” an oxymoron? Or only when it is used in conjunction with the process of Brexit? Global isn’t really the opposite of Britain. So whereas Global Village might be considered an oxymoron, Global Britain isn’t anymore of an oxymoron than Global Germany or Global Switzerland.

    Putting the word Global in front of a country doesn’t mean that much, if anything.

    I suppose the questions to be answered are: Is Germany more global, or more internationalist in outlook, by virtue of it being in the EU? Or, with Switzerland, is it less internationalist because it isn’t? Is Singapore less internationalist because it forcibly divorced itself from Malaysia in the 60’s?

    We can have an opinion on these questions. And we can have an opinion on Britain in and out of the EU too.

    1. You are probably right ont he English, though I think Mrs May meant slightly different things with each “Brexit” – but then that doesn’t make it a tautology!

      And as for being open rather than closed, this is not about membership of the EU (which, it must be said, is not necessarily global in attitude) – it is about Mrs May’s attitude to the outside world – and migration in particular. She goes well beyond just wanting to make sure that immigration should be orderly and geared to economic interest. She wants to get the numbers down whatever the cost because she, or her voters, don’t seem to like foreigners. And I think she has narrow instincts generally. Regardless of that I intensely dislike the expression “Global Britain” even if it did herald a genuinely open attitude to the rest of the planet. Britain is Britain. It cannot be global. It may wish to be part of a globally integrated system, but that is something else.

      1. I think immigration is a difficult issue for anyone with fair minded opinions. I’d include Lib Dems in that too, even though I think they’ve strayed much far too much into neo-liberal territory over the years!

        If UK governments did get back to sensible economics they’d worry far less about their deficits than they do, they’d reflate the economy and aim for a sensible balance between having too much inflation and too much unemployment. You’ll be aware of the concept! But there is a big BUT to all this.

        At present, the pool of unemployed available to UK employers isn’t just the 1.5 million or so that are registered in the UK. It includes 20 million unemployed workers in the EU too. Some 4 million of them are under the age of 25. They are highly mobile and will do exactly what I would have done when I was their age. Move in search of work.

        So , this situation does change things somewhat. Any Government in the EU which doesn’t go along with the senseless rules of the Stability and Growth pact, and, really, that is only the UK, can run high trade and government deficits quite safely. There is little or no inflation risk provided there is a huge pool of unemployed labour to draw upon.

        Consequently, although the UK government has run quite large deficits in recent years the effect hasn’t been what might have been expected. We’ve had low inflation, but on the other hand the working classes have had their incomes squeezed. In other words the expansion hasn’t created growth, it hasn’t caused incomes to rise but it has caused a significant imbalance in the numbers of workers entering and leaving the country.

        This is the economic reality which the left has failed to grapple with for fear of being labelled xenophobic. Whilst sensible economic policies can go a long way to solving the UK’s unemployment problem they can’t be expected to solve the EU’s unemployment problem too. The choices for the UK are to carry on as we are in the EU. No-one seems particularly happy about that. Let unemployment rise to EU levels. Also not a good option. Or leave the EU and run the UK economy independently.

        1. Certainly it’s a tough one, and the Lib Dems seem far more interested in stirring things up than presenting constructive solutions. And I agree with you that access to immigrant labour (and not just from the EU) has been one of the reasons that inflation has been subdued since 2000. The great unknown is what would have happened if we had not opened the doors quite so widely to central Europeans in the 2000s. I suspect the economy would have stalled, but maybe a bit of wage inflation is what we actually need? Would the British unemployed and underemployed have risen to the challenge of the shortage of agricultural workers, plumbers, builders, etc? Or would activities such as vegetable farming have had to have been discontinued? And it doesn’t look as if much of that 20 million was very interested in looking for work here. In the past it has worked in the other direction too (Auf Wiedersehen Pet) – not much danger of that for a while, I would think.

          What adds to the politics of all this is that the ability to move to work in other countries is quite a valued right. It is mentioned quite a bit in connection with Brexit, especially amongst younger people. I think this is the deeper root of people linking immigration to xenophobia – displaced fear that their own prospects will be limited. Interestingly the Indians are catching on – they are resisting Mrs May’s wish to but “trade” and “mobility” into different negotiating baskets. I expect Me Trump will be more amenable.

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