The lethal combination of Brexit and Covid

2 June 2020

12:04 AM

2 June 2020

12:04 AM

The combination of Covid-19 and Brexit is a double whammy. The first was a haymaker that hit Britain from nowhere. The follow up will come when Britain, quite deliberately and with malice aforethought, winds up its fist and punches itself in the face. The economic impact of the virus will be accentuated by the UK leaving the EU without a deal or with a meagre free-trade agreement, warns a grim report, sponsored by the Best for Britain think tank.

Business leaders do not generally get much sympathy. Watch any thriller made in the last two decades and as soon as the corporate executive appears on screen you can guess with a fair degree of certainty that the hero will unmask him as the villain in the final reel. They deserve our sympathy now. Even with a free-trade agreement, the report’s authors conclude that Britain will lose £40 billion a year. (The costs of no deal are £60 billion.) Employers, already having to cope with social distancing and a collapse in demand, will see their terms of trade with our largest trading partner rewritten on 31 December.

Regions and industries that might have managed Brexit will be hit by the combination of the two, the report’s authors, Kathryn Petrie and Amy Norman from the Social Market Foundation, conclude. London looked as if it could have managed leaving the single market at the end of the year without too much pain. London would be fine as it always is, the cynical assumed. Now it is likely to face one of the biggest coronavirus-induced shocks. The majority of its profitable businesses – banking and financial services – could be in trouble if the property market stalls. The commercial property market, for instance, which rarely featured in predictions of the coming economic damage before Covid-19, is likely to be battered if companies decide that offices in city centres are dangerous as well as expensive and encourage employees to work from home.

As always, however, the North will suffer the most. Already, analyses of different Brexit outcomes saythe North West and North East will bear the greatest losses. Northern manufacturing might have bounced back from Covid-19, as large plants can be adapted for social distancing. It will find it far harder to bounce back from Covid-19 and Brexit. The irony – if that is the right word – of small-town voters in red wall seats voting for their own suffering is not too hard to explain: Labour under Jeremy Corbyn lacked the ability and the political will to warn of the dangers. Meanwhile, a large portion of the Brexit/Tory vote consisted of pensioners, who no longer needed to worry about unemployment.

Nevertheless, the suffering will be real and the authors ask what the Government will do about it. The only sensible answer is: who knows with this Government? But with the national debt growing exponentially it’s hard to see the Treasury rushing out more emergency support for business. The authors put it like this: ‘With public debt spiralling, the Government is boxing itself into a fiscal corner unless it extends the transition period and secures a trade deal at the end of the ongoing negotiations.’

Objectively, the recommendation makes sense. If Boris Johnson were to appear at a press conference and announce that he was asking the EU for an extension to the trade talks because of the pandemic, the majority of the public would understand. The country, people would reason, had enough to cope with already without adding to its troubles.

But in a politics captured by extremists what the majority of the public wants may not matter. I have not heard one prominent supporter of Brexit argue for Britain to take its time. They do not and I suspect dare not because Brexit had morphed into something the electorate was never told would be possible in 2016. It has become a radical creed, where any concession is a kind of heresy. When this government has compromised, it has covered up its concessions and pretended they were victories for British resolve.

When Boris Johnson partitioned the United Kingdom by allowing a border in the Irish Sea, he agreedto what Theresa May said no British Prime Minister could ever agree to. As the deceived Ulster unionists have learned, few in the rest of Britain care overmuch about them. But prolonging the talks means prolonging a state of British vassalage Brexiters care about very much: membership of the single market and customs union, and contributions to the EU budget. Any decent deal that would protect the economy would mean carrying on handing over money and accepting EU regulations we have no say in making.

At no point has Boris Johnson or his lieutenants prepared his supporters for the costs of compromise. Johnson can be made the butt of the old joke told about the 19th century French politician Alexandre Auguste Ledru-Rollin. He was sitting in a café when he saw a Parisian crowd charging towards the barricades. ‘There go the people,’ he cried. ‘I must follow them, for I am their leader.’ Because Johnson, Raab and Gove have ridden the nationalist wave of the hardcore Brexiters, because they have never told them hard truths or explained the need for compromise, they are wide open to accusations of betrayal.

As French revolutionaries at the barricades learned, revolutions have their own logic. The leaders can always be accused of selling out, by men who promise to provide a purer revolutionary clique, until they are accused of betrayal in turn. The Brexit revolution or counter-revolution, if we are being precise, is following a similar course. The Tory right, and Nigel Farage, can still turn on Johnson if he follows the national interest. As with David Cameron and Theresa May, I suspect that Johnson is more concerned with appeasing them than with securing the economic futures of the Britons in whose interests he is meant to govern.

A few weeks ago, Johnson would have had the authority to stand firm. (Not that he gave any indication of wanting to stand firm, mind you.) After the Cummings scandal, his popularity has gone. My guess, and I hope I’m wrong, is that he is too weak and dependent on his core support to do anything other than allow Britain to fall into a terrible Brexit deal, or no deal at all.

Brace yourself and learn to take your punishment like a man. Another punch is heading straight toward your unprotected face.

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