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Drop the Brexit BS; this is serious

Among the less endearing habits of the anti-Brexit media is a tendency to latch onto any negative economic news as “evidence” that leaving the European Union will have a negative impact on the UK economy (it may actually be far worse than that).  For instance, Mary-Ann Russon at the BBC asks why Britons are spending so little this Christmas:

“There are discounts galore on the High Street, and online retailers have also started discounting products, 12 days before Christmas. Sales usually rise in the run-up to Christmas, so why are consumers spending less this year…

“Katy Straub, 22, from London, says that she is definitely spending less on Christmas this year because of several factors, including rising prices in stores, and the ongoing political uncertainty.  ‘I am worried about Brexit,’ she tells the BBC. ‘I’m just trying to be aware of my spending habits as the future of the economy is very unknown’.” (My emphasis)

Brexit has also become a convenient scapegoat for the growing list of corpses on Britain’s failing high streets.  For example, Angela Monaghan at the Guardian reports that:

“Shares in Bonmarché have plummeted by 40% as the value womenswear chain issued a stark profits warning, blaming ‘unprecedented’ trading conditions on the UK high street…

“The Wakefield-based firm said Black Friday sales had been ‘extremely poor’ and the impact of Brexit uncertainty on consumer demand had wiped out hopes of a profit in the full year to the end of March 2019.” (my emphasis)

The problem with this is that Bonmarché is a clothing retailer.  It is unlikely that consumers have been putting off buying winter clothing in 2018 because Britain is going to leave the EU in spring 2019.  There is a link with Brexit here, but this is not it.

In fairness to Mary-Ann Russon, anyone who scrolls down here article (most short attention span readers don’t) will discover that:

“Latest figures from the Office for National Statistics show that wages are continuing to rise at their highest level for nearly a decade.

“Yet an analysis done for the BBC by the Institute for Fiscal Studies in September shows that on average, people’s real annual wages are £800 lower than ten years ago.

“Some of the young adults the BBC spoke to said that they were living on less income in 2018 than they did previously, so they don’t have much money for Christmas this year.”

It is entirely likely that investment decisions have already been affected by uncertainty over Brexit.  Moreover, as the unfolding shambles of the UK government attempt to sell a deal that nobody wants continues, an increasing number of businesses will simply relocate to the EU.  However, few consumer decisions are affected in the same way.  Sure, if you are thinking about a large outlay on something like buying a house of a car, you would do well to wait until next April.  But the idea that people are going to put off buying a raincoat or an umbrella from a clothing store because of Brexit lacks credibility.

Britain’s retail apocalypse is being driven by austerity policies put in place long before Brexit was dreamed up.  Most of the UK retail sector is based around mass consumption that depends upon marginal sales to be profitable.  With real wages currently less than two-thirds of their 2008 level, British consumers simply lack the spending power to keep stores like Bonmarché in business.

Austerity also provides the link with Brexit.  Arguably, David Cameron and George Osborne lost the 2016 referendum in Britain’s traditionally Labour-voting ex-industrial regions where austerity policies have hit the hardest.  Not that these were the only, or even the majority of Brexit voters; but they were the difference between 48 percent and 52 percent of voters.

The point is not that Brexit will be damaging to the UK economy (it will).  Rather, it is that the austerity policies that helped cause Brexit are still having a devastating impact on the UK economy; and will do so irrespective of whether the UK leaves the EU next March.  Admitting this is the first step to healing the many social chasms that have opened up in the years since the Brexit vote.

The current Remainer narrative – based on claims that every economic ill is the result of Brexit – is that 2016 Leave voters have seen the error of their ways and now want the chance to reverse the decision.  Polling, however, is far less conclusive.  Failing to acknowledge the damage that austerity has done to the UK economy risks giving the not unwarranted impression to former Leave voters that affluent Remainers continue to ignore them and are simply bent on overturning a democratic vote.

The key to winning a second referendum with a sufficient margin to prevent an uprising among pro-Leave groups is both to acknowledge the economic damage that has been inflicted on Britain’s poor since 2010 and to demonstrate how those problems could be overcome by staying within the European Union… a Union, by the way, that is currently in flames because of its leaders’ insistence on imposing the same type of austerity (socialism for the rich, capitalism for the poor) on its working class.

As you made it to the end…

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