Brexit: The Bank of England’s Horror Story

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Stewart Dalby

There has been a serious fault line running the Conservative party ever since it signed up to join the Common Market in 1971. A fault line is defined by the Oxford English Dictionary as: A divisive or difference of opinion that is likely to have serious consequences. Remember Maastricht? Get a sense of Deja Vue?

The Maastrict Treaty was the agreement that turned the European Community into the European Union and laid the foundations for the European single currency, the Euro. John Major the then Tory prime minister hailed the treaty, agreed in December 1991 by the then 12-member state, as a good deal for Britain. He praised the opportunities he believed a single market in goods and services, and the free movement of labour, offered. And he believed that a concession, allowing the UK to decide whether, not when, to join a single European currency, was key.

Maastricht Treaty

Eurosceptic MPs and some of John Major’s cabinet members (whom he called the Bastards) believed the treaty would give the EU greater powers at the expense of Westminster. They saw it as a step down the road to a centralised federal EU. And they implacably opposed to the UK joining a single European currency.

Battle was truly joined. Lord Rees-Mogg went to court to stop the Maastrict Treaty from becoming law – but judges supported the government on all issues. John Major, his small parliamentary majority draining away, decided to tough it out. He resigned as PM only to win his job back after a fresh vote against John Redwood, one of the “Bastards” who stood against him.

He lost a series of votes in the House of Commons. Then on 23 July 1993 he lost the main motion. The ratification of Maastricht was blocked. Major announced there would be a vote of confidence. He won the vote. The Maastricht Treaty was passed and Major had very skilfully kept the UK out of the Euro. He had avoided a political and economic cataclysm.

The fault line is still there. Are we seeing another convulsive eruption? A re-run of the Maastricht drama? Yes, there similarities at a superficial level. There is another Rees-Mogg, Jacob, Lord William Rees-Mogg’s son, making mischief. There are also lots of MPs huffing and puffing about the lost sovereignty and how we can put the word Great back into Great Britain by pulling off some very iffy trade deals outside the EU.

But in the greater scheme of things Brexit is exponentially different to Maastricht. The issues are infinitely more complex than was the case way back in 1993. And Britain is a vastly different place, socially, economically, politically and culturally than it was 25 years ago.

As May ponders the enormous mess she now finds herself in; our Prime Minister may well hang some of the blame on her predecessor. In 2015 he seemed to be on a roll. First, he had won the Scottish referendum on independence. Second, he triumphed, against all predictions, by winning the General election in May 2015, albeit with a small overall majority of 12 seats.

He had been spooked by the apparently growing influence of Nigel Farage’s UKIP party during the election campaign. He thought he could be third time lucky, so he set June 2016 as a date for a referendum on Brexit. At a stroke he would disappear the fault line in the Tory Party and bring the warring sides together.

He was wrong. He really didn’t need to do it. It turned out to be a colossal mistake. It ranks now as one of the greatest acts of political folly in ages, alongside Anthony Eden’ intervention in Suez in 1956 and Tony Blair’s backing for the war in Iraq in 2003.

Talking about and voting in the Brexit Referendum was a shabby xenophobic affair on both sides. David Cameron and his sidekick George Osborne, the then Chancellor of the Exchequer representing the remainers launched “project fear” which issued misleading bulletins predicting the country’s gross domestic product (GDP) would fall if the country exited. Personal incomes would tumble. Unemployment would soar.

The Brexiteers on their side initiated a distorted campaign. They said that £350m a week paid to the EU would be saved and devoted to the NHS. The NHS would get nothing like £350m a week. The Brexiteers also disgracefully pandered to the lowest common prejudices of the large swathes of populations north of Watford and the prosperous south-east of England.

Many of these people feel they have been disenfranchised, made redundant and impoverished by successively; the de-industrialisation of Margaret Thatcher, the austerity of George Osborne and globalisation. They were inundated with a farrago of neo racist anti-immigrant propaganda suggesting that life would become even worse than it is now.

But it is not just these domestic UK issues under consideration in the Brexit debate. There are broader world -wide forces at play. The rise in populist nationalism in France, Germany, Austria and Holland; the roaring up of Donald Trump in the US with his return to insular fortress America; and of pretentious attempts of Corbynism in the UK to return to a socialist paradise that never existed; all suggest that the golden era of neo-liberalism is coming to an end.

Under this 70-year old era great institutions like Nato, the World Bank, the United |Nations (UN) and the EU were set up. They kept the world generally and Europe in particular free from wars and strife and witnessed growing posterity. If all this is indeed coming to an end and nobody knows what is to replace it, it is small wonder the UK has become so badly divided and the vote so close – 52 per cent to leave and 48 per cent to remain.

Mrs Theresa May became leader of the Tories because she seemed like the only adult in the room at the time. She took a chalice which was overflowing with poison. Following on from David Cameron, she faced snipers from all sides including the Tory Brexiteer backwoodsmen led by Boris Johnson, who was correctly described by John Major: “A good end of the pier turn but not a lot else”, as she made her own mistakes.

She triggered Article 50 prematurely in March 2017. This started the countdown ending to an exit in December 2020 without sorting any known destination. She made the same errors that Tony Blair used to make by relying on non-elected officials and ignoring cabinet advice; even though government ministers wasted precious time arguing amongst themselves

Despite all this she has battled on with grit, determination and growing self-confidence. The agreement she has come up with seems to have made many people unhappy. But, I for one, am one of the few who feel it is the best deal possible.

She has delivered on Brexit in that it honours the pledge to leave the EU. It also addresses one of the most contentious concerns of the leavers in that there will be an end to free movement of people. Business will be comforted by the knowledge that there will be almost frictionless trade as we remain in the customs union and the single market.

Our security and intelligence services will remain in place.  The backstop in Northern Ireland will mean no return to a hard border in Ireland, at least for the time being. The UK will have to pay a £39bn divorce bill. But it will not have to chip in the regular monthly millions of pounds of contributions.

Brexiteers in parliament and elsewhere have rejected the agreement as totally unacceptable on the grounds that it is not a true Brexit. The UK would remain in the customs union and single market, but no longer have a say in the rules and regulations governing the EU or any control over its institutions such as the European Court of Justice (ECJ) or the central bank (ECJ). As Jo Johnson one of the ten ministers who have resigned over the agreement put it: “This agreement means we become a vassalage state”

Remainers across all political parties have rejected the deal because they want a second referendum which ideally will reverse the first one and allow us to stay in the EU. Either that or try and enhance Mrs May’s agreement by incorporating a Norway or Canada arrangement which would improve trading mechanisms.  But are these real alternatives? The government has said that under any political alternative to staying in the EU will mean Britain will miss out on 3.9 per cent of GDP Britain would have had in 15 years time. But this is surely better than a no-deal Brexit.

Bank of England

The Bank of England recently laid out a horror story. It said a disorderly no-deal Brexit would plunge Britain into its deepest recession since the 1930s. House prices could fall by 30 per cent. Interest rates could rise to 5.5 per cent and the economy could shrink by 8 percent. Mrs May has justlostthree votes in parliament, which does not augur well for those fearing a no-deal Brexit; the critical vote on Tuesday 11th December could also seal Mrs May’s fate, potentially ending her career in political chaos if the commons rejects the deal on the table. And so, one can only hope that MPs seriously consider what May has been saying. Namely: “There is no better deal available.

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