Dear Subscribers,
With the “coronation” of Rishi Sunak as the next prime minister, UK politics may become a bit more stable. Perhaps most importantly, Sunak inherits an improving economic climate. UK 10-year gilt yields have fallen to around 3.5%, roughly where they would have been had upward trends in September continued without the disruption of the past few weeks, and mirroring broader upward trends in the price of French and German government borrowing. Natural gas prices are also collapsing, as fears of recession loom – reducing inflation and the cost of subsidising energy bills.
The UK’s first Hindu Prime Minister – and perhaps its richest
Sunak has largely appointed a “unity” cabinet, though some of his supporters are pressing for the dismissal of Suella Braverman over a relatively minor ministerial infraction, and for purging the pro-Brexit right of the party. That pressure, coupled with the effective veto that the OBR and Jeremy Hunt’s Economic Advisory Council now possess over fiscal policy, will make radical reform (and facing up to the EU) harder given the strong establishment pressure for the status quo.
Sunak is continuing for now the Johnson government’s mass bonfire of EU-derived legislation, though there are rumours that he may consider delaying the deadline. This would be a mistake. Not only does the proposed legislation remove swathes of often-burdensome EU regulation, but regulatory divergence will make harder the task of any government that wishes to rejoin the Single Market. The growth opportunities are substantial – in tech (for instance) EU data protection measures clearly inhibit businesses.
Less encouraging, however, is the news from Northern Ireland. Ulster will see fresh elections as the deadline for forming a new government elapses, as the DUP refuses to agree to power-sharing while the Northern Ireland Protocol remains in its current form. Loyalist groups are frustrated at the lack of progress, with their warnings as yet unnoticed by the Westminster news cycle.
Hoping the Protocol goes the way of the Jacobites
As Baroness Hoey warns, if their concerns are not addressed there is little indication that the region’s assembly can be re-constituted. Meanwhile, paperwork for bringing in goods from the rest of the UK remains crippling, and mirrors the province’s relatively poor economic performance.
Media
Briefings Co-Editor Robert Tombs has written in the Daily Telegraph summarising the conclusions of our Report on the impact of Brexit. That Report has now surpassed 9,000 views – do keep sharing it to help debunk Remain myths about the economy.
Blogs
Who’s Really Talking?, by Catherine McBride
Markets don’t talk – those voices are coming from your television. The talking heads of mainstream media try to justify short-term market volatility by telling their audience what they wish ‘the markets’ were thinking, as if ‘the markets’ are a one-dimensional, conscious being. They aren’t. More importantly, markets fundamentally cannot hold a single opinion. For every buyer there must necessarily be a seller. And for every buyer who thinks the market will go up, there is a seller who believes the opposite. That is how markets work.
“Now, the Media are trying to convince us that the pound has increased to $1.15 because Sunak was installed as Prime Minister, yet they are studiously ignoring that while he was Chancellor it dropped from $1.30 to $1.20. Should we conclude that the market thought he was a rubbish Chancellor but might be an OK Prime Minister?”
The Remainer coup in the Tory party, by David Blake
A Remainer coup has taken control of UK economic policy – the real risks to the economy now come from the Remainer elite both at home and abroad
“The Chancellor should ideally look at the predictions from other macroeconomic models as well as the OBR model. But this is not going to happen.
And this is exactly what the Remainers at HMT want. They now have the Chancellor entirely in their hands.”
Key Points
The Economist magazine is at it again. This week it claimed that among the difficulties facing Rishi Sunak is the fact that “Britain is alone among G7 economies still below pre-pandemic levels of output”. OECD data on real GDP says different. The OECD measure (code VPVOBARSA) shows UK growth from 2019Q4 to 2022Q2 was ahead of Germany and Japan. and exactly the same as the G7 average excluding the USA (where growth has been boosted by a huge fiscal expansion).
This narrative is widespread among Remain-leaning commentators. Paul Johnson in the Financial Times out Brexit top of the list of things “making us much poorer than we otherwise reasonably expected” – naturally without giving any evidence. Matthew Paris in the Spectator likewise holds Brexit accountable for creating difficult financial conditions, and for exacerbating political polarisation. Even Michel Barnier has weighed in, claiming that Brexit “makes everything harder” regarding the mini-budget.
This developing elite groupthink is the reason it remains imperative to debunk dodgy claims about the economy. It also stifles any real chance to benefit from Brexit by liberalising other sectors of our economy by its alarmist criticism of trade deals and deregulation, such as in agriculture where cheap food could be a serious help against food price inflation.
Dog Whistle Politics
One of the more distasteful strands of criticism that Rishi Sunak has faced is his portrayal in as some kind of race-traitor. The most splenetic and unpleasant expression of this view is Pankaj Mishra’s take in the Guardian.
Certain of the arguments used there are classic antisemitic tropes – in particular the accusations of callousness to the less fortunate, concern only with worldly success, and insular religious ritualism. Their recycling, and application against a different ethnic minority, suggests that the modern Left is highly vulnerable to a particular kind of prejudice, which addiction it can’t seem to shake.
More broadly Suella Braverman, Kemi Badenoch, Kwasi Kwarteng and other prominent Tories have all been similarly attacked at different points from the left in similar ways. Whatever one may think of their various policies and records, it disturbing that ethnic minority Conservatives provoke such vicious attacks from certain of their opponents.
We are also on Twitter, posting articles and retweeting the daily events that bring Brexit to the fore in the national news.
Discussion also continues over on Facebook.
How you can help
There is much about Britain’s relationship with Europe that remains to be decided. Our MPs listen to their constituents. Do continue to send them links to our articles, especially on matters relevant to your constituency – for example, in rural areas, articles on the threat to British agriculture. Alternatively, make an appointment to speak to them at their next surgery. Let them know what you want post-Brexit Britain to look like.
As Boris Johnson said in in his post-election address, it is also time for unity and reconciliation. Keep reading our posts and share links to our quality content to help others understand how leaving the EU benefits the UK economy and our own democratic governance. We aim to educate our critics to think differently and more positively about the long-term impact of Brexit.
You can follow us on Facebook and Twitter.
Yours Sincerely,
Newsletter Editor
A Cambridge PhD Student
Economist, Centre for Business Research, Judge Business School University of Cambridge
Emeritus Professor of French History, University of Cambridge
