by Michael Roberts
That was the campaign slogan of the incumbent Conservative
government under PM Boris Johnson. And it was the message that won over
a sufficient number of those Labour voters who had voted to leave the
EU in 2016 to back the Conservatives. One-third of Labour voters in the
2017 election wanted to leave the EU, mainly in the midlands and north
of England, and in the small towns and communities that have few
immigrants. They have accepted the claim that their poorer living
conditions and public services were due to the EU, immigration and the
‘elite’ of the London and the south.
Britain is the most divided in Europe geographically. The election confirmed this ‘geography of discontent’,
where rates of mortality vary more within Britain than in the majority
of developed nations. The disposable income divide is larger than any
comparable country and has increased over the past 10 years. The
productivity divide is also larger than any comparable country.
The ‘leave’ view was stronger among those who are old enough to
imagine the ‘good old days’ of English ‘supremacy’ when ‘we were in
control’ before joining the EU in the 1970s. Once in the EU, we had the
volatile 1970s and the crushing of manufacturing and industrial
communities in the 1980s. The flood of Eastern European immigrants
(actually mainly to the large cities) in the 2000s was the last straw.
In the ’remain capital’ of England, London, Labour’s vote held up as
the ‘remain’ party, the Liberal Democrats, were squeezed down. The LDs
did badly but still had a higher share of the vote (11%) than in 2017.
The Conservative share of the vote rose only slightly from 2017 (42.3%
to 43.6%), but Labour’s slumped from 40% in 2017 to 32%. So the opinion
polls and the exit polls were very accurate. Indeed, the overall
turnout was down from 69% in 2017 to 67%, particularly in the Brexit
areas. Once again, the ‘no vote party’ was the largest.
This was clearly a Brexit election. The Labour party had the most
radical left-wing programme since 1945. The social and economic
manifesto of the left Labour leadership was actually quite popular.
Labour’s campaign was excellent and the activist turnout to canvass and
get the vote in was terrific. But in the end it made little
difference. Brexit still dominated and the Labour vote was squeezed.
Not every voter wanted to ‘get Brexit done’, but clearly sufficient of
the 2016 ‘leave’ voters had enough of delay and procrastination by
former PM May and parliament and wanted the issue dealt with.
Usually, elections are won on what the state of the economy is. This
election was generally different. But even so, the measure of
‘economic well-being’ index (based on a mix of the change in real
disposable income and unemployment rate) suggested an improvement since
former PM May lost her majority in 2017. The economy at the level of
investment and output may have been stagnating, but the average UK
household was feeling slightly better off since 2017, with full
employment and slight improvement in real incomes. That helped the
Johnson government.
What now? The government under Johnson will now move quickly to pass
through parliament the legislation necessary for the UK to leave the EU
by end of January at the latest. And then the more tortuous process of
signing up a trade deal with the EU will begin. That is supposed to be
completed by June 2020, unless the UK asks for an extension. Johnson
will try to avoid that and he can now make all kinds of concessions to
the EU in order to get a deal done without the fear of a backlash from
‘no deal’ Brexiters in his party, as he has a big enough majority to see
them off.
With the Brexit issue likely to be out of the way by this time next
year, the British economy, which has been on its knees (stagnation of
GDP and investment) is likely to have a short pick-up. With
‘uncertainty’ over, foreign investment may return, house prices recover
and with the labour market tightening, wages may even pick up. The
Johnson government may even steal some of Labour’s proposals and boost
public spending for a short period.
Longer term, the future of the British economy is dismal. All
studies show that outside the EU, the British economy will grow slower
in real terms than it would have done if it had remained an EU member. The
degree of relative loss is estimated at between 4-10% of GDP over the
next ten years, depending on the terms of the trade and labour deal with
the EU. Also, it is still unclear how much damage there will be to
the financial services sector in the City of London. But this is all
relative; implying just 0.4-1% off the projected annual growth rate.
So, for example, if the UK grew at 2% a year in the EU, it would now
grow at about 1.5% a year.
And then there is the joker in the pack: the global economy. The
major capitalist economies are growing at the slowest rate since the
Great Recession. There may be a temporary truce in the ongoing trade war
between the US and China, but it will break out again. And corporate
profitability in the US, Europe and Japan is sliding, alongside rising
corporate debt. The risk of a new world economic recession is at its
highest since 2008. If a new global slump comes, then the mood of the
British electorate may change sharply; and the Johnson government’s
Brexit bubble will then be pricked.
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