As organizations line up to announce doom and gloom for the UK's economy, not enough people are mentioning the accessory to economic murder.
You know things are bad when acronyms are queuing up to give you bad news. In quick succession, we have had expert organizations warning of our imminent economic and cost-of-living woes.
First, at the end of September, the ONS (the Office for National Statistics) announced that GDP grew only 0.2% in the three months to June. This put the UK as the only G7 economy in a worse place than they were before the pandemic. A deeper recession followed by a weaker recovery than others presented the UK as in a comparatively weak economic position.
This has recently caused the BBC economics editor, Faisal Islam, to dare to possibly link our state of affairs to Brexit:
Then, in early October, the IMF (International Monetary Fund) downgraded next year’s UK growth predictions to a mere 0.3%, predicting the year’s inflation to be the worst in the G7 (at almost 2% higher than the next worst). What, many are now beginning to ask, differentiates us from those other European countries?
Next, ESRI (Economic & Social Research Insititute) produced a report estimating that UK to EU trade has declined by 16% and EU to UK trade has fallen by 20% since 1 January 2021. Put simply, “EU-UK trade is sharply lower than in a world without Brexit.”
And now, today, the OBR (the Office for Budget Responsibility, a non-departmental public body funded by the UK Treasury providing independent economic forecasts and independent analysis of the public finances) has brought out a damning report. The spending watchdog has reported that the UK is in recession that will last more than a year, unemployment will rise by 500,000, and we are experiencing the biggest fall in living standards since records began.
The OBR doesn’t hold back. The next two years, where the spending power of British households will be grossly reduced as wages fail to keep up with inflation and interest rate rises, will wipe out the last eight years of economic growth. This will also represent the third time since the mid-1950s that we have had consecutive years of falling living standards.
The OBR’s picture is bleak: “The medium-term fiscal outlook has materially worsened since our March forecast due to a weaker economy, higher interest rates, and higher inflation.”
But why is the UK suffering more so than other developed nations? The elephant in the room is, of course, Brexit. Recently, in talking to Bloomberg News, economist and economic adviser Michael Saunders declared that the UK economy has been “permanently damaged by Brexit”:
The ONS has found that, in Q3 2022, the UK recorded GDP growth of -0.2% compared with the previous quarter. In the Eurozone, GDP growth was 0.2%. Compared to the pre-pandemic level, UK GDP in Q3 2022 was 0.4% lower. This compares with Eurozone GDP being 2.1% higher than its pre-pandemic level, while US GDP was 4.2% higher.
Again, why the difference?
Today, the new Chancellor of the Exchequer, Jeremy Hunt, has announced today that everyone will have to tighten their belts in light of tax rises in a new era of austerity: He will stimulate the economy by slashing spending. But still, the ruling Conservative Party will not admit that Brexit is damaging the nation’s finances for fear of losing the base.
This comes on the back of arch-Brexiteer Tory MP and former minister and even UKIP member George Eustice announcing in parliament that one of the few trade deals we have completed (with Australia and New Zealand) was a “failure” deal for the UK, and it was all Liz Truss’s fault for pushing it through.
But neither major party, the Conservatives or Labour, has the courage to face the truth of Brexit and do something meaningful about it. Labour, as well as the Tories, realizes that a large proportion of their working-class base voted for Brexit, a fact that has paralyzed them in recent elections.
James O’Brien, the firebrand LBC presenter, is not afraid to speak the truth:
Until that elephant is outed, discussed, and put to bed, the UK will not be able to move on as a country, and its economy will be all the poorer for it. Wake up and smell the coffee? More like get up and move the mammoth.
But that’s not going to be easy.