Get Brexit done!

That was the campaign slogan of the incumbent Conservative government under PM Boris Johnson.  And it was the message that won over a sufficient number of those Labour voters who had voted to leave the EU in 2016 to back the Conservatives.  One-third of Labour voters in the 2017 election wanted to leave the EU, mainly in the midlands and north of England, and in the small towns and communities that have few immigrants.  They have accepted the claim that their poorer living conditions and public services were due to the EU, immigration and the ‘elite’ of the London and the south.

Britain is the most divided in Europe geographically.  The election confirmed this ‘geography of discontent’, where rates of mortality vary more within Britain than in the majority of developed nations. The disposable income divide is larger than any comparable country and has increased over the past 10 years. The productivity divide is also larger than any comparable country.

The ‘leave’ view was stronger among those who are old enough to imagine the ‘good old days’ of English ‘supremacy’ when ‘we were in control’ before joining the EU in the 1970s. Once in the EU, we had the volatile 1970s and the crushing of manufacturing and industrial communities in the 1980s.  The flood of Eastern European immigrants (actually mainly to the large cities) in the 2000s was the last straw.

In the ’remain capital’ of England, London, Labour’s vote held up as the ‘remain’ party, the Liberal Democrats, were squeezed down.  The LDs did badly but still had a higher share of the vote (11%) than in 2017.  The Conservative share of the vote rose only slightly from 2017 (42.3% to 43.6%), but Labour’s slumped from 40% in 2017 to 32%.  So the opinion polls and the exit polls were very accurate.  Indeed, the overall turnout was down from 69% in 2017 to 67%, particularly in the Brexit areas.  Once again, the ‘no vote party’ was the largest.

This was clearly a Brexit election.  The Labour party had the most radical left-wing programme since 1945.  The social and economic manifesto of the left Labour leadership was actually quite popular.  Labour’s campaign was excellent and the activist turnout to canvass and get the vote in was terrific.  But in the end it made little difference.  Brexit still dominated and the Labour vote was squeezed.  Not every voter wanted to ‘get Brexit done’, but clearly sufficient of the 2016 ‘leave’ voters had enough of delay and procrastination by former PM May and parliament and wanted the issue dealt with.

Usually, elections are won on what the state of the economy is.  This election was generally different.  But even so, the measure of ‘economic well-being’ index (based on a mix of the change in real disposable income and unemployment rate) suggested an improvement since former PM May lost her majority in 2017.  The economy at the level of investment and output may have been stagnating, but the average UK household was feeling slightly better off since 2017, with full employment and slight improvement in real incomes.  That helped the Johnson government.

What now?  The government under Johnson will now move quickly to pass through parliament the legislation necessary for the UK to leave the EU by end of January at the latest.  And then the more tortuous process of signing up a trade deal with the EU will begin.  That is supposed to be completed by June 2020, unless the UK asks for an extension.  Johnson will try to avoid that and he can now make all kinds of concessions to the EU in order to get a deal done without the fear of a backlash from ‘no deal’ Brexiters in his party, as he has a big enough majority to see them off.

With the Brexit issue likely to be out of the way by this time next year, the British economy, which has been on its knees (stagnation of GDP and investment) is likely to have a short pick-up.  With ‘uncertainty’ over, foreign investment may return, house prices recover and with the labour market tightening, wages may even pick up.  The Johnson government may even steal some of Labour’s proposals and boost public spending for a short period.

Longer term, the future of the British economy is dismal.  All studies show that outside the EU, the British economy will grow slower in real terms than it would have done if it had remained an EU member.  The degree of relative loss is estimated at between 4-10% of GDP over the next ten years, depending on the terms of the trade and labour deal with the EU.  Also, it is still unclear how much damage there will be to the financial services sector in the City of London. But this is all relative; implying just 0.4-1% off the projected annual growth rate.  So, for example, if the UK grew at 2% a year in the EU, it would now grow at about 1.5% a year.

And then there is the joker in the pack: the global economy.  The major capitalist economies are growing at the slowest rate since the Great Recession. There may be a temporary truce in the ongoing trade war between the US and China, but it will break out again.  And corporate profitability in the US, Europe and Japan is sliding, alongside rising corporate debt.  The risk of a new world economic recession is at its highest since 2008.  If a new global slump comes, then the mood of the British electorate may change sharply; and the Johnson government’s Brexit bubble will then be pricked.

18 thoughts on “Get Brexit done!

  1. Well done MR for getting this piece out so quickly – I’m sure it will be useful for others in developing a balance sheet going forward

  2. Hi Michael,
    I appreciate all your analysis, even if sometimes I would focus differently. For example, I see government debt much more critically than you. Marx described government debt as a means of converting taxpayers’ money directly into capital through interest.
    I do not live in the UK, so I do not have the right to supplement or criticize your assessment of the election result. But I’m a little surprised that you don’t mention anywhere about rampant nationalism or chauvinism in response to the prolonged social and economic crisis in Britain.

    1. “The ‘leave’ view was stronger among those who are old enough to imagine the ‘good old days’ of English ‘supremacy’ when ‘we were in control’ before joining the EU in the 1970s. Once in the EU, we had the volatile 1970s and the crushing of manufacturing and industrial communities in the 1980s. The flood of Eastern European immigrants (actually mainly to the large cities) in the 2000s was the last straw”

    2. “Others present more evidence that high public debt can damage the capitalist sector. A recent paper looking at data for over half a million firms in 69 countries found that high government debt affects corporate investment by tightening the credit constraint faced by companies, especially those companies that find it difficult to get credit: “when public debt is at 25% of GDP, the correlation between investment and cash-flow is just above 9%, but this correlation goes well above 10% when public debt surpasses 100% of GDP. This finding is consistent with the idea that higher level of public debt tightens the credit constraint faced by private firms.” What this means is that, as banks use more and more of their cash on buying government bonds, they have less available to lend to firms – “crowding out”.”

  3. “If Corbyn had won and taken us out of the EU we would have gone all Venezuela. If he’d won and kept us in the EU we’d have gone all Greece. The result is the best of the bad options available.” – Valiant_Thor, 26m ago

    This comment on The Guardian encapsulates the average Conservative voter for these 2019 elections.

    The UK is really at a crossroads: it is too tiny and poor in natural resources to implement socialism, but it is declining as a capitalist power.

    I don’t think the average British really thinks Venezuela is socialist or that Corbyn’s policies would make them very poor, but I think they are afraid of the sanctions and embargoes they would suffer from the USA if they dared to try to go back to social-democracy.

    This defeat may also be historic: this could go to History as the end of social-democracy. Social-democracy was already dead as an effective political force after the oil crisis of 1974-5, but at least it was able to polarize with neoliberalism in the ideological field and had some prestige that far outlived itself (to the point it was the main propaganda weapon that ultimately convinced Gorbachev to destroy the USSR, and to the point it was able to convince historians like Hobsbawn that it had actually “won the war” after 2008). Now it isn’t considered even credible by half of the population of one of the few countries it was able to govern and fully influence in the post-war period.

    In Rosa Luxemburg’s last article (a few days before she was executed), she finally admitted defeat to the Bolsheviks. “We must separate the essential from the non-essential”, she wrote. And the essential, she completed, was the fact that the Bolsheviks were right and the German Social-Democrats were wrong. It happened again, almost 100 years later.

  4. Why does the English working-class voter (or French-LePen, German-Afyd, Italian-Salvini, Spanish-Vox, Brazilian-Bolsonaro, American-Trump, practically everyone …) vote right-wing and far-right parties today? Is the worker also afraid of the dismissal of his employer in his SECRET VOTE? Is there a different reactionary working class today and far from the previous revolutionary? Do workers have little (economic) knowledge? Why do they choose parties that anyone who knows only a little economy knows that these parties will continue to harm them and continue to favor their exploitation? Will we continue to suffer and vote for right-wing parties ad ’ad eternum’ ’and democratic socialism is not present nor should it be expected?
    What is the explanation of Marxist (or other) science for that regressive vote? What is the opinion of one of the best current Marxist economists, M.R.?
    It is appreciated to know a reason for this unreasonable, no doubt.

  5. Clearly, the majority of the working class in the U.K. (the bottom 90% of the population) is politically ignorant, nationalist, socially conservative and/or just plain apathetic. Now Britain can become little england, scotland, n. ireland and wales. The Brexit debate is clearly an expression of nationalism, albeit different types of nationalism. What’s mission is class consciousness about who produces the wealth and the few who appropriate the lion’s share, the bourgeoisie, the upper 10%. And when the financial crash comes, they can all blame it on “Europe” and further follow their strong man on the white horse to a nostalgic pint over those times when Britannia ruled the waves.

    Hail Britania
    Britania ruled the waves
    We will ever, ever, ever
    be wage-slaves!

    1. Yes, they should not be allowed to vote, should they? Funny, people who criticise the monarchy for being undemocratic complain when democracy does not deliver the result they want.

  6. A very depressing result. It confirms the weakness of the EU project and, under the Tories, opens Britain up to even more rampant capitalist forces. The shutting off of England from the rest of the UK is also confirmed and there is little that the Tories have to offer to mend that. As for their One Nation concept, apart from its neo-fascist overtones, in the absence of war, Britain has never been one nation as the previous “red wall” attested. The breaking of that wall may be temporary, but it more dangerously signals a breaking away of the old working class areas from the Labour Party perhaps never to return and, if so, susceptible to a UKIP type entity. Labour will now be riven even more by the conflict between Blairites and Corbynists. In the background more sinister forces that ply their poisonous messages via social media as well as the conventional press, will attack the left as it attempts to regroup. And now, as they trumpet the rejection of socialism as a triumph of “British good sense”, the temptation to run from the “red” label will be strong. Given the looming danger of financial and, in the longer term, climate chaos, the reduction of the Labour Party into a Tory-lite entity must be resisted. Only a planned response to these dangers that aims directly at the needs of the majority of populace will have any chance of averting disaster. One silver lining is that, in the longer run, Brexit can free up the Labour Party to implement such an approach.

    1. I am no supporter of the Conservative Party but was both relieved and delighted at the result. A Corbyn win would have precipitated an immediate economic crisis.

      1. You’re delighted at more austerity, inaction on climate change and the selling of the NHS? You are a wretched individual indeed.

      2. If what you mean is that the entrenched financial establishment would have precipitated a crisis, that would be a short-term event. The real wealth of Britain is in its people and a government acting in their interests would prevail over short-term financial manipulation.

  7. If the bottom 90% of the population is socially conservative and nationalist, should the representation of socially conservative and nationalist views continue to become a monopoly of the side that also promotes neoliberalism?

    Will the left be able to fight neoliberalism, while consistently pushing liberal and anti-nationalist views, that the aforementioned 90% of the population doesn’t identify with?

    1. You make a good point Alice. These groups may be very slow to adjust their views. But over 50% of the voters voted for non-Tory or Brexit parties. One of the problems is the legitimisation of conservative views by Johnson and his ilk. They have a huge advantage with Britain’s first-past-the-post electoral system which denies the majority preference.

  8. Do you have a Youtube channel as well with this kind of content on it? I would love to see this post turned into a longer video if possible. Maybe I can share on it on my website.

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