Friday, 2 June 2017

It's what she doesn't say that matters

Yesterday, the Prime Minister told us that she believes that the UK will become more prosperous following Brexit.  In the simplistic terms in which it is stated, and treating the phrase ‘following Brexit’ as a temporal rather than a causal expression with no specific date put on the realisation of that outcome, I’d even agree.  But it’s close to being a statement of the obvious; given economic history, the trend line over the long term towards increasing prosperity is clearly an upward one.  Regardless of what politicians do or say, the long term underlying trend points in only one direction.
It’s not answering the right question, though; like almost everything which the Prime Minister prefaces with the words “I’m very clear about…”, it’s obfuscation rather than an attempt to provide clarity.  The right question is not whether the UK is likely to be more prosperous in the future than it is now; it is whether it will be more prosperous because of Brexit than it would have been if Brexit didn’t happen.  And the second question – probably of even more significance – is how that prosperity is shared.
The answer to the first is essentially unknowable over the long term.  There are too many factors to be able to predict accurately, and any predictions would be based on assumptions – essentially guesses – as to what may happen.  I tend to the view that the longer term economic scenarios (Brexit vs no Brexit) will converge; the argument was never primarily an economic one for me.  But in the short term, it seems clear to me that growth in prosperity will falter.  It may even reverse for a while, depending on the terms of any deal - with ‘no deal’ causing the biggest short term problems.  In the short term, any form of Brexit has more economic downside than upside, and the Brexiteers would have been more honest had they spelled that out from the outset.  Whether it is really a case of ‘short term pain for long term gain’ remains to be seen (they may be right, even if I’m not convinced); but it’s a more honest position than claiming we’re on the way to an immediate land of milk and honey.
The bigger question is about how any increase in prosperity will be shared, both geographically and demographically.  Some of the proposals which have emanated from the Brexit camp, such as deregulation and seeking to become some sort of tax haven, carry very clear implications that the disparity in wealth between the well-off and the less so will continue to increase.  And the suggestion that targeted regional aid should be replaced by a pot of money for which regions could bid suggests a move away from the EU policy of trying to spread wealth geographically as well.  Under such a scenario, an ‘average’ increase in prosperity for the UK is unlikely to have much impact here in Wales.
As with so much of what May says, the most important part of what she said is what she didn’t say.  Not for nothing does she avoid committing to any detail.  

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