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Analysis

With businesses blindfolded, no wonder economy is in trouble

by Luke Lythgoe | 12.02.2019

The chancellor found himself grappling with a slew of dire economic figures yesterday, knowing full well that continued Brexit uncertainty means worse is likely to follow. The economy only grew by 0.2% in the final quarter of last year – and actually contracted by 0.4% in December. Meanwhile business investment was down a whopping 3.7% on the same quarter last year.

That’s bad news for British jobs. Look no further than the recent decision made by Nissan not to build its new X Trail model in Sunderland, and the fears of workers there, for an example of the real-life consequences of a Brexit downturn.

Now the latest figures are only snapshots from the end of 2018. But anyone following the business news since new year will know things have not improved. What’s more, the chancellor himself fears the economy-sapping impact of Brexit will continue, with Brexit talks and the threat of a calamitous “no deal” crash out expected to go to the “eleventh hour”.

And even if Theresa May somehow managed to scrape her deal with the EU through Parliament, the economy would struggle to pick itself up. That’s because May’s deal will give neither clarity nor closure on Brexit.

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All the big concrete decisions about the UK’s future relationship with the EU have been postponed until after we’ve left. Endless political fighting will mean those decisions won’t be made for years to come. Businesses need to know basic facts about the future: what our relationship with our biggest trading partner will be; what our immigration system will look like and who they will be able to hire. Instead they’ll get a blindfold Brexit, and it will be miserable.

Certainly, the chancellor’s claims that securing an agreement with the EU will mean a “deal dividend” now look ridiculous. Getting a withdrawal deal would not mean an economic boost so much as “avoiding something really very bad”, a highly critical report by the Commons Treasury committee says. Indeed, economic analysis by both the government and independent experts shows that even the softest Brexit will leave the UK economy worse off in years to come than it would be if we stayed in the EU.

But there’s a positive flipside to all this bad news: we can boost our economy by staying in the EU. Not only that, but it would remove the distraction of Brexit and allow politicians to focus on fixing the problems that led to Brexit in the first place – an ailing NHS, too few homes, overstretched schools, communities left behind.

The way to do that is with a People’s Vote. It’s still within our power to say no to this endless blindfold Brexit which will leave us all poorer.

5 Responses to “With businesses blindfolded, no wonder economy is in trouble”

  • I haven’t looked at the report by the Treasury Committee yet, but if it follows other reports I have seen to discuss relative damage to the economy compared our existing EU membership in terms of % points, it will be hard to impact people who just want to see the Government get on with it. What does a 2%,5% or 8% relative drop off in the economy mean to the man in the street? People need to see these numbers as effective worsening of their disposable income in £s per person/ per annum. Only when you compare numbers like that to our current EU contributions can people see how great a risk that is being taken by the Poker players of May’s Government.

  • We can stay in the EU? I am just reading Hurrah stories from Dutch newspapers how noticeably Amsterdam collected thousands of highly paid jobs and has a major problem to get enough housing on the market to deal with the influx. They see it as evening out the dire blow to the economy they suffer as a result of Brexit, none of their making. None of those jobs will come back to Britain even if we stay in the EU after all. And looking at the way things go, companies are now making final decisions on whether to move or not. Once taken and the move set in motion I doubt whether that will be stopped only because Brits suddenly see the light of reason.

  • Peter,
    I suspect you are right, and who can blame companies relocating with such an incompetent bunch of chancers at the helm, encouraged by an entourage of the public dismissing such talk at ‘Project fear’ at every opportunity.
    I hope we wake up in time to call them to account for the damage to the UK, and our European neighbours that they have done.

  • My biggest fear is war. We have right wing populism on the march and protectionism rearing it’s ugly head. We are going back to self interest and extreme nationalism. Look how this Brexit crap has brought racism out into the open once more. I think the parallels with the 1930s are clear. The provlem with idiot politicians such as Mark Francois are too thick to see the dangers of what they are advocating. I really do fear for my grandkids who are going to have to sort all this out.
    May is playing a dangerous game. Ian Blackfofrd had a real go at her today and she sat there laughing. She talks about her precious union but Scotland will break away because it wants to be an European nation. The future of the world is in the balance with international organisations under threat and instability across the globe from Venezuela to Burma to Syria to China to the Ukraine etc. And no one is paying any attention. It is deeply worrying.