JOE GILL: UK’s pre-Brexit ‘recovery’ is as illusory as the phoney war

Joe Gill examines the so-called pre-Brexit recovery and whether it was real and impactful or just a figment of our imaginations.

Last week, former British prime minister Tony Blair gave a powerful speech on Brexit. It was one that anyone in Ireland who cares about Britain and its relationship with Europe should read.

Instead of the jingoism that has defined so much commentary on Brexit, in both political and media circles in Britain, this was a profoundly insightful perspective.

It laid bare the harsh realities of what leaving the European single market means for the UK but it also underscored the achievements of the European project, not least in creating decades for peaceful co-existence by nations that had a history of war.

Mr Blair could have avoided the opprobrium that was an inevitable result. He knows there are many parts of the political and media classes who would instantly jump on his past to ridicule his well-argued thesis.

Instead of addressing the facts that he laid out they instead went for yet another character assassination, targeting his known flaws and career mistakes. Is there anything more odious than pious opining more interested in tackling the man instead of the ball?

That Mr Blair chose to run the gauntlet of this criticism is a better measure of his integrity than all the headlines produced by the newspaper gang prowling around the Brexit issue with the same enthusiasm as the Brownshirts in fascist Germany.

This speech cuts to the core of why Brexit is packed full of risk for the British nation, and by association Ireland. It details the complexity that stems from the requirement to re-negotiate over 50 trade agreements in place of existing structures.

Presently, these risks are lost in the soothing airs created by a sequence of monthly economic data points that suggest Britain’s economy is in fine shape. Employment is high, economic growth is solid and consumer confidence has remained strong. This, however, is as illusory as the Phoney War in 1939.

The UK has had a massively positive jolt from a near 15% decline in sterling while inside the EU single market. Exports have been boosted and revenues from outside the UK have been inflated when converted to sterling. This will change quickly when the UK leaves the single market.

Then, over the next 24 months, we will hear a huge amount about the real economic consequences of Brexit and that will spook both markets and politics. Travel is a high profile sector where you will read a lot of early headlines, I reckon.

The EU will be keen to socialise the possibility of visas, taxes and huge delays at airports and ports for those who want to travel between the UK and the rest of Europe. While that may be just a negotiating opener it will serve to create turmoil.

The Brexiteers will likely respond by threatening tariffs on people, goods and service entering the UK that outcome evolves. It will kick on from there.

Mr Blair’s speech takes place ahead of Article 50 and the consequences of its triggering. If the economy and various Brexit negotiations develop amicably and without rancour, then I suspect his words will be drowned in the resulting celebrations.

However, if we are now entering a more dangerous phase of Brexit, marked with high profile clashes by political leaders, and an unfolding set of economic data in Britain that deteriorates markedly over the next two years, then his speech will become a rallying call for political, business and social leaders who believe a grave and multi-generational error is being committed.

In this latter scenario, the political system in the UK could change rapidly. Already, there are powerful forces within parts of the Conservative, Labour and Liberal Democratic parties who are strongly opposed to Brexit.

Important political figures in Scotland, Wales and the North likewise. That is happening while the economy is calm. Imagine what could happen if things change for the worse.

  • Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.

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