Johnson’s conjuring tricks are wearing thin

The consequences of Brexit are finally becoming apparent. Sadly, worthy though the ambition is, transformation of the UK into a high-wage, high-skills economy is unlikely to be one of them

Never waste a good crisis, is a worthy if tired motto. But never has the notion been put to more brazenly opportunistic use than by Boris Johnson’s government. Like a fairground magician performing dodgy conjuring tricks, Johnson this week produced the most preposterous rabbit yet from his Brexit hat: the promise that by barring migrants and raising wages, leaving the EU would transform low-wage, low-productivity, service-based Britain into high-wage, high-productivity Germany.

Like all his previous rabbits – the famous £350m a week for the NHS, ‘prodigious extra quantities of fish’ for UK fishermen, frictionless access to the EU single market (‘the easiest agreement in the world’) assured by the insistence of Italian prosecco and German car manufacturers, the assurance that the Irish circle can be squared just by saying so, in short his whole cakeist agenda – this one will turn out to be illusory. 

Of course, everyone would like to see a high-wage, high-productivity, levelled-up economy. But the notion seized on by a panicky government that 40 years of sedate jogging down the low road to a low-skills service economy fed by an endless supply of cheap European labour can be reversed in months by market forces is both fantastical and insulting. Yet this is par for the course from a government whose lack of planning and preparation for Brexit and messianic belief in the free market leaves other Europeans slack-jawed with astonishment. 

While Brexit isn’t the cause of every one of the current emergencies, it is making all of them worse – and will continue to do so. Naturally, this could and should have been foreseen. 

Take the gas crisis, the result of a uniquely British collision of Brexit, short-sighted regulation and government inattention. Brexit was the trigger, leading predictably to the UK’s exit from Europe’s internal energy market in January this year. Warning bells should have sounded in 2017 with the closure of the UK’s largest storage facility, holding 70 per cent of the total, when the government withdrew financial support. The final straw dropped this autumn with the collapse of a number of fragile energy firms when their business model of buying energy short to supply under longer-term fixed-price contracts turned sour – exactly the same formula that, apparently unremarked by Ofgem, brought down the banks in 2008.

The same pattern of long-term neglect punctuated, as now, by periods of hasty policy retrofitting on the hoof, is repeated in many other sectors, notably logistics, as well as in the shape of the economy as a whole. As ministers are now discovering, the UK’s hands-off attitude to globalisation has bequeathed an unresilient economy that imports far more than it exports, most of it from Europe and much in essentials. Most economies carry six to nine months of stocks in their supply chains, and these are now running low at a moment when the global economy is picking up. Predictably. Given its unbalanced economy, this is particularly serious for the UK, and it can only get worse when the full regime of customs checks and declarations on imports, which has been repeatedly pushed back, is finally imposed next summer. Once again, thank you, Brexit.

For everyone bar Johnson himself, a few hedge-fund cronies, and a booming bureaucracy industry, the Brexit vanity project has been a disaster. Think fishermen, reeling from a smack in the face with a wet mackerel instead of the revived industry they signed up for; farmers leaving crops rotting in fields or having to incinerate thousands of pigs for lack of pickers and abattoir workers and butchersto process them; exporters to Europe labouring under the costs and delays of extra paperwork and customs checks; the City of London, hardly a low-pay sector, which nevertheless wants temporary visas for brainy foreigners to help drive start-ups in fintech, law and ‘advisory services’; firms and even individuals in retail, hospitality, care and logistics, worn to a frazzle by worsening conditions even as pay edges up; and, finally, consumers, unable to fill up their cars, who face supermarket shelves emptied of necessities and generously hiked prices on those they can actually buy. 

So far, the government has dealt with all this by short-term expedients, chiefly blaming Covid and hurling money around with the abandon of a Euromillions lottery winner, along with toting a few small wins (one of which, believe it or not, being the proud boast that publicans and retailers can now revert to the 1970s and sell stuff in imperial measures – pounds, ounces and pints). But the larger contradictions are coming home to roost as the Treasury reverts to type and flatly contradicts the levelling-up discourse by raising taxes and removing £20 a week from the pitiful amounts available to the most vulnerable Universal Credit claimants. So what happens if the wage increases the government now praises as the welcome price of Brexit feed through into rising prices rather than productivity, which on past form seems supremely likely, and red-wall voters at last begin to see through the artifice of the magician’s tricks? 

Some fear that in that case Johnson would play the last card in his Brexit hand and carry out the long-threatened unilateral withdrawal from the Northern Ireland protocol. This would set off a major diplomatic crisis with the EU and US, and the kind of ‘back me or else’ crunch at home that he has exploited before. If that happens, with Covid infections still running at 60,000 a day, by far the highest in Europe, a shortage of turkeys or sprouts will be the least of the UK’s Christmas worries. It may be a long, cold winter. 

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