If the International Trade Secretary Liam Fox is wrong to say the UK has “a golden opportunity to forge a new role for ourselves in the world” in the “post-geography trading world” as a member of the World Trade Organization (WTO) – the body which helps sets rules for trade between different countries, then what?
Just how bad would things have to get with our economy before the government and/or parliament decides it is against the national interest to pursue Brexit?
It would seem Theresa May believes that the threat to our society from mass and uncontrolled immigration is significantly greater than the threat that Brexit could pose to the British economy. She possibly anticipates that the largest wave of immigration in our country’s history could be one to destabilise our society to the point of riots breaking out and the election of a fascist government, as we have seen in Hungary. I suspect she is deeply anxious to avoid such things happening and reads the public mood being one of accord with her. Her poll ratings would seem to support this view.
But this is not a simple equation. We know that we already have “control” over non-EU immigration and that these numbers of immigrants have been very high, largely to support our economic needs. Our universities want these people and so do our businesses.
The flow of EU citizens to our country can’t be stemmed unless we leave the Single Market. Thus the government logic appears to be that we must detach ourselves from the EU in every single respect.
So how damaging could a “Hard Brexit” be to the UK and what point would the government, parliament and the people say “enough is enough”? In the sunlit uplands of autumn 2016 this seems a distant prospect. But the early signals are there. The statement by Carlos Ghosn, Nissan’s chief executive, said he could scrap a potential new investment in the UK’s biggest car plant in Sunderland if the government refuses to pledge compensation for any tariffs that may be imposed after Brexit should send out an alarm signal as should the Society of Motor Manufacturers and Traders echoing his warning and saying Theresa May’s government should step in to preserve the mainly foreign-owned industry. SMMT estimates about 814,000 people rely on the sector for employment. General Motors’ investment at Ellesmere Port in Cheshire has long been finely balanced. It could take little to tip them over the edge and build their next models elsewhere. The absence of “passporting” for the financial institutions mainly based in London and Edinburgh could have a profound effect in the economic sector and government tax revenues.
Many of the inward investment decisions will be invisible. Boardrooms around the world will assess future decisions on European investment and once they have run their numbers and included WTO tariffs and the costs related to their regulatory administration they will either direct investment to mainland Europe or scale down their UK proportion of investment. No emotions or sentiment will be involved (though the harm may be mitigated by our culture and language advantages and lax employment laws). A ten year period of uncertainty will have a significant impact on investment decisions.
If the economy is harmed by the above decisions and many others, how far will unemployment have to rise to wake the government up? Half a million? A million? How far will government tax revenues have to fall? 5%? 10? A downturn of such a dimension would cause great personal hardship to many families. It would lead to a loss of life too, not just from the fall in standards of living and depressive illnesses but also because we would have less to invest in the NHS. Indeed we have less available to invest in all our public services.
Those in favour of Brexit would doubtless argue that other factors are the cause. And there will be new political and economic events that we can’t currently foresee. A further European banking crisis? Heightened problems with Russia, climate change catastrophes? Who knows?
Our job is to identify the consequences of potential Brexit and place them fairly and squarely where they belong.