This month’s Prospect conducts an unsparing health check on the state of trade and industry in Brexit Britainby Tom Clark / November 17, 2017 / Leave a comment
Astronauts and explorers submit to rigorous medicals, and so—you might think—should economies before they embark on a leap into the unknown. This month’s Prospect conducts an unsparing health check on the state of trade and industry in Brexit Britain.
Let us start, as a doctor would, with general fitness. The news is not all bad. The UK is a very active patient—in the sense that jobs are plentiful—but too much of the abundant activity is of the low-exertion, pottering-in-the-garden variety. It’s not doing the strenuous stuff that can build the strength and stamina which a modern economy needs to thrive in a competitive world. For many years now, as Diane Coyle reports, the labour of Britons has yielded less than that of the long-holidays French or the long-hours Americans, and that productivity gap has been getting worse, rather than better.
Next our medic will want to home in on one organ that looks a bit bloated—namely the City. It no longer looms quite as large as it did before UK plc’s last health crisis, but it still brings in a great chunk of national income and tax revenues. In the face of Britain’s planned adventure, some senior bankers are beginning to talk openly about their plans for leaving. Nicolas Véron suggests that the loss of a tenth of City activity is inevitable, and cautions that much more substantial haemorrhaging is now a real risk.
Our physician would, finally, assess the scale of the shock that the patient can expect on their voyage—the equivalent of the G-force on an astronaut. Former Bank of England rate-setter Adam Posen is emphatic: the jolt is going to be big. There is, he insists, no feasible Brexit that does not put up barriers to commerce with the UK’s chief trading partner, something that’s bound to do damage.
Is there room for a second opinion? Social scientists have, after all, repeatedly misread the last few years. The noted dissident economist, Paul Ormerod, argues that a bit of Brexit shock therapy could shake the UK out of its cosy complacency, but doesn’t really explain how any politician is going to be able to persuade an indignant country to take their harsh medicine. The government, after all, seems to be crumbling, even as it kicks hard truths down the road. If, as looks possible, our patient looks not only unproductive but also increasingly ungovernable, our medic would surely advise strongly against all thoughts of wild exploits into the unknown.