Brexit Reality Check: It’s No-Deal or Corbyn

TruePublica Editor: The latest warning about a no-deal Brexit may sober up some of the most ardent of Brexiteers. This is not ‘project fear’ – simply a projection based on what is known by totting up the numbers. Emergency tax cuts and higher public spending to offset the impact of a no-deal Brexit would send government debt, ie the national debt, to its highest level in more than half a century, according to Britain’s leading experts on the public finances.

The Institute for Fiscal Studies (IFS) said the scale of the government response required to firefight a flatlining economy in the event of a disorderly departure from the EU would come with a hefty price tag for the public purse. Most people believe this to be the case and are resigned to it already. The IFS also said government borrowing was already set to more than double next year regardless of the outcome of negotiations with Brussels and that the state would hit almost 90% of GDP if Britain crashed out of the EU without a deal, its highest level since the mid-1960s.

Paul Johnson, the director of the IFS, said: “You could well be on an upward spiral of debt and deficit – and in a world in which we have to go through another period of austerity to undo it.”

Both main political parties are now in a punch-up for giveaways to the people and neither seem affordable. Boris Johnson’s plan (so far) is set to increase government debt by £50bn but in a no-deal scenario, that is likely to rise to £100bn by 2021-22. And every economic prediction of a no-deal Brexit puts Britain in that region give or take.

Paul Johnson went on to warn – “The government is now adrift without any effective fiscal anchor. Given the extraordinary level of uncertainty and risks facing the economy and public finances, it should not be looking to offer further permanent overall tax giveaways in any forthcoming budget,” he added. Any argument that the Tories have over fiscal discipline and finger-pointing at Labour’s lack of it has vanished.

But none of this will concern the Johnson government. For it to retain power, it has backed itself into a no-deal, do-or-die corner. The 19th of this month – the date when the government is required to ask the EU for an extension if no deal has been agreed approaches. It will be the next test of an unpredictable and unstable government placing its bets against the courts, the law of the land and representative parliament. From there, just two weeks later the next big challenge to this posture materialises.

There has been much speculation as to what may actually happen in the near future. Predictions are supposedly impossible in this fast-changing climate but there is actually really only one of two outcomes far more likely than anything else and that is a no-deal Brexit with Boris Johnson or Jeremy Corbyn in government. Just to restate that – it’s no-deal or Corbyn. For the centre-ground, both are uncomfortable.

For passionate Leavers and Remainers, it’s a contest that sees one side unequivocally lose irrespective of how close the result is. The problem for Johnson is that his hand is being forced into a more hardline stance because of Nigel Farage and the Brexit Party who are becoming so far-right it’s breathtaking. This in itself is fortifying the remain camp as the political extremes of this government turn into public dismay and then sheer panic.

 

Johnson has to feed the hardline right-wing radicals in his own party to ensure he doesn’t suffer an insurrection from within. After all, he can’t afford to split the vote and so must be just as, if not more extreme – than Farage.

With Jeremy Corbyn in No10, and assuming the polls are correct, in a coalition, a second EU referendum will be offered. Only this time the choice will likely be to Remain or negotiate a soft Brexit (and the vote for 16-year-olds will probably be given to boost support). That being the case – Remain will win the day – and probably decisively. Brexiters will self immolate with rage but get nowhere. The far-right will ignite a few riots here and there.

The Labour coalition partner will likely be the SNP who will ask for clearance of IndyRef2 as a price for seats. The Welsh nationalists and a Green seat or two will be helpful to demonstrate unity. All will get some advantage at the expense of the taxpayer.

The LibDems have forced themselves into a corner. Swinson’s open hatred of Corbyn and a no-deal Brexit in equal measure means having to make some sort of decision even it if means not objecting to Corbyn in No10 (the most likely decision).

No matter what happens, another year will pass. Businesses working with the EU will defect in ever greater numbers, investment into the UK will continue to decline, the economy will slowly enter recession and promised sunny uplands never sees the light of day through the clouds. To pay for all of this, the national debt will inevitably increase and one day the spending spree will be replaced with forced austerity. One side will forever blame the other.

Even if the dream of Britain being free of the EU and increased economic prosperity was a reality, ordinary people would never have benefited from it anyway. Thatcher proved that with an experiment that saw the liberalisation of markets – and the looting of a nation followed. In real terms, people are much worse off after decades of neoliberal capitalism than they were in the 1960s. Why would even more financial extremism help?

The big problem now is that no political party is fighting over the centre-ground. What beckons now is a soft form of Marxism or authoritarianism. The banning of private schools, property and asset seizures on the one hand or opening free ports for the rich to hide stolen and laundered assets on the other is what the voter will be faced with next. Promises of better education, health and policing will all be built on failed ideologies and neither party will truly deliver. As one of Britain’s most influential economists, Martin Wolf of the FT says – “Yet the issue now is not just Brexit. It is far deeper. The Conservative party has become an English nationalist party, busily stoking populist resentment. Meanwhile, the hard left has seized the Labour party. The curse of extremist politics has only just begun.”

What Britain needs today is real reform. Real capitalism not rigged markets. Banks that pay for their casino losses with suits behind bars when they defy the law. Education, health and policing taken out of the hands of short-term political ideologies that constantly fail our children, our workforce and our safety. They need longer-term horizons for world-class delivery, not top-down nonsense and sound-bites every five years. Those budgets should be set as a target of GDP not by people like George Osborne. The House of Lords should be full of people elected as representatives of democracy – not gifted to them for what is really little more than rigging political outcomes by people too old to understand it all. Britain needs to stand up for itself as a modern, outward-looking unified country, with a set of ideas and targets everyone can get behind, not the nonsense we find ourselves in now.

‘We didn’t fight two world wars’ or indeed vote for leaving the EU to become a nationalistic, isolationist country with a right-wing bigoted government despised by the neighbours we fought to protect. Britain laid lives down in a valient fight to create peace and protect democracy. It was the vanguard of what became a sustainable economic and political project. Sure the EU wasn’t perfect but against the American model, it proved vastly better where inequality is half and quality of life better, even though overall the EU28 are poorer than the Americans.

Sadly, tribalism, nationalism, isolationism is the best Britain can do right now and the immediate future is one of internal conflict for years.

That Leave.EU poster says it all. That is what Britain has become in front of its biggest trading partner – before it even sits down to hammer out a deal. But before all that – another battle with all of its vitriol and bile yet to be spewed into civil society approaches – it’s no-deal or Corbyn. What will you be voting for?

 

 

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