When will we get Brexits Black Wednesday? – The Guardian

It has been well publicised that the collapse in economic activity last year, occasioned by the officially induced lockdown, was the biggest for some 200 years. The British economy experienced a bigger hit than most other advanced economies; but it was only the UK that suffered the additional blow of the self-harm caused by Brexit.

The damage is already apparent to businesses and traders that are struggling to cope with the huge impact of the red tape imposed by Britains departure on exporters and importers. The recently published overseas trade figures were truly shocking. But, as my Guardian colleague Polly Toynbee observed last week, the extent of the crisis is not yet apparent to many readers of the Brexit-supporting tabloid press, for the simple reason that the problems are under-reported there, and the welcome early success of the British vaccine programme is being misleadingly attributed to the freedom of manoeuvre allegedly afforded by Brexit.

Brussels and various European leaders have hardly acquitted themselves well during the vaccine furore. But the gloating on this side of the Channel cannot disguise for long that Brexit is an unmitigated disaster, from which all this Global Britain stuff is a pathetic distraction. Most businesses seem to realise that there was a point to the rules of the single market. The red tape they face now dwarfs the minor irritations of what went before.

The crass stupidity of the Brexit plotters was illustrated in the claim to parliament by the prime ministers former adviser, Dominic Eyetest Cummings, last week that his motive for backing Brexit was to achieve the freedom to improve the UKs science base. The fact that we were perfectly free to spend more on science if we chose while within the EU was neither here nor there. Moreover, in my experience most scientists are horrified by the collateral damage of Brexit.

There have been three obvious acts of self-harm in British economic policy during the past 100 years: the return to the gold standard in 1925; the entry of the pound into the European exchange rate mechanism (ERM) in 1990; and Brexit. The first was alleviated when the national government came off the gold standard in 1931, and the second on Black Wednesday in 1992, when the pound was forced out of the ERM. In both cases, an overvalued exchange rate had been bad news for our trading position, but the situation was rectified.

But here we are, and the question as that great pro-European Conservative prime minister Harold Macmillan once said is where do we go from here? The answer, notwithstanding all the conflict between Brussels and Brexit Britain at present and things may well get worse before they get better is in due course to acknowledge the folly and, ideally, rejoin our most important trading partner, or at least move a lot closer. But I fear the lesson will be learned the hard way, and it may take years.

Meanwhile our Brexiter chancellor, Rishi Sunak, has an economy to run. It is a source of horror to many of his fellow Tories that he, a paid-up rightwinger, presides over an hitherto unimaginable level of government borrowing.

To those of us who, like the Queen, follow the horses, it was a source of some amusement during budget week that, while Sunak was going on about his moral duty to take control of the deficit and achieve sustainable finances, a horse called Fiscal Prudence could only manage to come 11th out of 13 in a race at Wolverhampton the week before, and 10th of 10 at Lingfield the following week.

On this question of sustainability, it was good to hear the former governor of the Bank of England, Mark Carney, say on the BBCs Today programme recently that there is something else that also matters: The sustainability of health and life outcomes. The malignant impact of the Conservatives austerity policy from 2010 onwards on the governments preparedness or lack of it for the Covid crisis has been widely recognised.

This ought to mean that the government should abandon its obsession with post-recovery tax cuts Sunak has apparently told Tory MPs that he wishes to have a tax-cutting budget before the next election and focus on achieving a decent health system.

Moreover, the other issue which has manifested itself during lockdown is the extent of poverty and deprivation in the country, not least among essential workers. President Biden, in his hugely impressive $1.9 trillion rescue package for the US economy, has been refreshingly revolutionary in concentrating resources on the poor. It is an example that Britain should follow.

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When will we get Brexits Black Wednesday? - The Guardian