When the new Labour government sought office it promised 'Change' and claimed that it had costed its manifesto pledges whilst dismissing in a number of pre-election debates that it would not raise taxes.
Black holes and expectations
Yet within weeks of winning the 2024 general election the new administration took aim at pensioners by cutting winter fuel payments and warned of a 'painful' budget due to a 'black hole' in the economy which it claimed it had not foreseen and that it had inherited from the previous Tory government.
Since the election Labour repeatedly claimed to have inherited a "£22 billion black hole" from the previous government. But there are suggestions the hole could be even larger with the Guardian pointing to a £100 billion hole and Sky News, prior to the budget, that the Chancellor of the Exchequer Rachel Reeves was looking to find £40 billion to plug public finances.
Whether the figure is as low as £20 billion or as much as £100 billion, it should come as no surprise to anyone that the British economy is failing.
GDP falls again
On Friday 13th December new figures showed the UK economy had declined further in October from the previous month, sinking the pound, and providing a tailwind for a FTSE 100 stacked with international earners
According to the Office for National Statistics, UK gross domestic product fell 0.1% in October from a month prior. In September, GDP had fallen at the same rate. Moreover, the UK economy barely grew between July and September, with uncertainty about the Budget being blamed for the weak growth [BBC / Sky News].
Labour had made boosting economic growth its top priority when it came into power but Chancellor Rachel Reeves said she was "not satisfied" with these latest figures which cover the first three months of the new government.
Following criticism of her fiscal policy Reeves claimed that she had seen little in the way of solutions being put forward.
Elephant in the Room
However there is an elephant in the room that most politicians continue to ignore; that of Brexit.
Whether the majority of the British people voted for it or not, the fact is leaving the EU has decimated the economy. And the cost to each individual, on average, is significant.
A government report published in January this year said that the average Briton was nearly £2,000 worse off in 2023, while the average Londoner was nearly £3,400 worse off last year as a result of Brexit. Further to this the report said the UK economy was almost £140 billion smaller because of Brexit. According to the new research, the economic damage is only going to get worse – with more than £300 billion set to be wiped off the value of the UK's economy by 2035 if no action is taken, and more than £60 billion wiped off the value of London's economy alone [London gov / Camecon PDF].
While the report was commissioned by the divisive politician Sadiq Khan and city hall, the otherwise independent report paints a bleak picture.
It also reinforces what is already known.
GDP loss
Estimates of the UK's GDP loss range from 1.2–4.5%. The UK's real Gross Value Added (GVA) in 2023 is around £140 billion less than it would have been if the UK remained in the EU.
Job losses
The UK has 1.8 million fewer jobs than it would have if Brexit had not happened. Moreover the UK is projected to have nearly 3 million fewer jobs post-Brexit by 2035.
Trade decline
UK goods exports to the EU have fallen by 27% since 2021, and imported goods are 32% lower. However, services have performed better than expected, with service exports now outpacing goods exports.
Regional disparities
The economic decline has been most pronounced in England and Scotland, while Northern Ireland has mostly benefited.
Foreign investment
Inward foreign direct investment dropped by 12.3 billion in 2020, the first drop since 2008.
Productivity
The OBR estimates that the UK's productivity could fall by 4% over the long term.
Living standards
Lower productivity usually means slower wage growth and lower living standards.
The list is almost endless.
Soon after Rachel Reeves' budget the governor of the Bank of England, Andrew Bayley made a speech in which he said that Brexit had "weighed" on the economy.
"The changing trading relationship with the EU has weighed on the level of potential supply. The impact on trade seems to be more in goods than services, that is not particularly surprising to my mind. But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people," Bayley said [BBC / Guardian / BoE].
Bailey was attempting to be diplomatic in stating that the UK should "rebuild relations while respecting the decision of the British people." However, polls are increasingly showing that the British people's position on Brexit has clearly shifted [Guardian].
Labour pledges
The new Labour government has dismissed out of hand any notion that Britain should rejoin the EU, the single market or the customs union.
Politically it would be damaging, since the pledge not to rejoin was clearly set out in their manifesto. But at some point the government needs to wake up and smell the coffee before it is too late to turn the boat around.
Rachel Reeves speaks of being "disappointed" concerning figures showing Britain's economic slowdown and merely talks of "hope" that things might improve [Daily Mail].
Hopes & Dreams
But futures aren't built on hopes and dreams. Farmers might have hoped for a better harvest this year. Yet inclement weather this year has resulted in the second worst harvest on record. The wheat harvest in England is estimated to be down by 21%, with Britain's wine producers also hit hard. Some harvests are down by between 75% and a third, depending on the region [Guardian].
While this has nothing to do with Brexit, leaving the EU will make replenishing the shortfalls with imported wheat more costly for consumers in the coming months since imports will prove more expensive due to Brexit related red tape.
The economic slump and rising costs is only likely to increase a brain drain. Recent polls indicate that some 23% of UK adults are considering moving abroad in the next five years, with 12% contemplating emigration in the next 12 months [ifammagazine].
Such figures are of course speculative. A desire to leave won't necessarily manifest itself in reality since there are practical and financial factors that may thwart such a move.
Nonetheless it is concerning that ever growing numbers of the better educated and qualified are expressing the desire to jump off what might be perceived as a sinking ship, HMS Britain.
Change
So back to that 'black hole'. Should the current government make the decision to rejoin the EU, what would that mean in reality?
There would of course be political repercussions from the hardline Brexit headbangers within the Tory party and Nigel Farage's Reform UK. Such protestations could of course be stemmed by proposing a final binding referendum, now that the British public has seen the fallout from the 2016 Brexit decision.
Negotiations could then be discussed, in lieu of this, with EU counterparts with a proposal to implement article 49, and thus pave the way to Britain's rejoining the bloc.
The mere proposal to rejoin, while upsetting some, would likely increase confidence within business and could bolster investment from abroad if seen as a serious attempt at becoming a key player within Europe once again. This in turn could see deficits reduced and a rebuilding of the economy.
Of course there will be hurdles. And it could take up to ten years before being ratified - though there is a slim chance that this could be sped up if there was agreement on all sides.
A change of direction, rather than the 'make Brexit work' approach - which clearly isn't working, has a far greater potential of bringing back some buoyancy to HMS Britain and help turn the ship around.
Britain may still have some future, but not whilst it is sailing around in a rudderless ship without a clear set course, and from which greater numbers of passengers and crew are fleeing in whatever lifeboats they can find.
tvnewswatch, London, UK
Black holes and expectations
Yet within weeks of winning the 2024 general election the new administration took aim at pensioners by cutting winter fuel payments and warned of a 'painful' budget due to a 'black hole' in the economy which it claimed it had not foreseen and that it had inherited from the previous Tory government.
Since the election Labour repeatedly claimed to have inherited a "£22 billion black hole" from the previous government. But there are suggestions the hole could be even larger with the Guardian pointing to a £100 billion hole and Sky News, prior to the budget, that the Chancellor of the Exchequer Rachel Reeves was looking to find £40 billion to plug public finances.
Whether the figure is as low as £20 billion or as much as £100 billion, it should come as no surprise to anyone that the British economy is failing.
GDP falls again
On Friday 13th December new figures showed the UK economy had declined further in October from the previous month, sinking the pound, and providing a tailwind for a FTSE 100 stacked with international earners
According to the Office for National Statistics, UK gross domestic product fell 0.1% in October from a month prior. In September, GDP had fallen at the same rate. Moreover, the UK economy barely grew between July and September, with uncertainty about the Budget being blamed for the weak growth [BBC / Sky News].
Labour had made boosting economic growth its top priority when it came into power but Chancellor Rachel Reeves said she was "not satisfied" with these latest figures which cover the first three months of the new government.
Following criticism of her fiscal policy Reeves claimed that she had seen little in the way of solutions being put forward.
Elephant in the Room
However there is an elephant in the room that most politicians continue to ignore; that of Brexit.
Whether the majority of the British people voted for it or not, the fact is leaving the EU has decimated the economy. And the cost to each individual, on average, is significant.
A government report published in January this year said that the average Briton was nearly £2,000 worse off in 2023, while the average Londoner was nearly £3,400 worse off last year as a result of Brexit. Further to this the report said the UK economy was almost £140 billion smaller because of Brexit. According to the new research, the economic damage is only going to get worse – with more than £300 billion set to be wiped off the value of the UK's economy by 2035 if no action is taken, and more than £60 billion wiped off the value of London's economy alone [London gov / Camecon PDF].
While the report was commissioned by the divisive politician Sadiq Khan and city hall, the otherwise independent report paints a bleak picture.
It also reinforces what is already known.
GDP loss
Estimates of the UK's GDP loss range from 1.2–4.5%. The UK's real Gross Value Added (GVA) in 2023 is around £140 billion less than it would have been if the UK remained in the EU.
Job losses
The UK has 1.8 million fewer jobs than it would have if Brexit had not happened. Moreover the UK is projected to have nearly 3 million fewer jobs post-Brexit by 2035.
Trade decline
UK goods exports to the EU have fallen by 27% since 2021, and imported goods are 32% lower. However, services have performed better than expected, with service exports now outpacing goods exports.
Regional disparities
The economic decline has been most pronounced in England and Scotland, while Northern Ireland has mostly benefited.
Foreign investment
Inward foreign direct investment dropped by 12.3 billion in 2020, the first drop since 2008.
Productivity
The OBR estimates that the UK's productivity could fall by 4% over the long term.
Living standards
Lower productivity usually means slower wage growth and lower living standards.
The list is almost endless.
It's the economy, stupid!
But while hardline Brexiteers may bleat about sovereignty - which was never really lost by being a member of the EU - to quote the US Democratic party strategist James Carville, "It's the economy, stupid!"
Simply put, if the economy is doing well, everything falls into place. If the economy fails it can lead to recession and even revolution.
Britain is unlikely to revolt. But the risk of a deep recession is very real [City AM] .
Of course money needs to be found to deal with the £22 billion deficit, and fund housing, infrastructural projects, the health service, etc.
But taxing a population who are already feeling the pain of Brexit repercussions, as well as the fallout from the war in Ukraine and the COVID-19 pandemic, will not improve matters.
Britain needs to attract investment, which in turn creates jobs. However, foreign investors are dissuaded from investing in the UK, primarily because of Brexit, due to increased red tape which makes exporting products to the EU more difficult logistically, and more expensive.
Tourism
There has been a fall in tourism to the UK since Brexit, especially school exchange trips. While new rules for French school trips were introduced in December 2023 there are concerns these may be affected by more Brexit red tape to come [Guardian].
And while there has been a slight lift in school parties heading to Britain since the former PM Rishi Sunak made a deal with the French last year, things don't always work out as intended. Earlier this month a minor paperwork error left 100 French schoolchildren stranded and forced to head back to their hometown after UK border officials refused entry.
The group of Year 6 students aged 10 and 11, had been eagerly anticipating their five-day trip to the Scottish Highlands. British border officials in Amsterdam refused them entry, citing incorrect information on the France-UK School Trip Travel Information Form, a mandatory document since Brexit for French students travelling to the UK. The error was a trivial one in that the school had mistakenly entered both identity card and passport numbers into the same section of the form, rather than separating them into their designated fields.
The 'jobs-worth' border guards could not be dissuaded by Dutch port officials who attempted to mediate and the students simply had to return to Saint-Winoc college in Bergues in northern France [La Voix du Nord].
The incident was not an isolated one. And while the news made headlines mostly in the French press, it is not good for Anglo-French relations.
Economically it is a disaster. French educational trips alone contributed around £100 million per year to the UK economy before Brexit [Schengen News]. But after Britain left the EU in January 2020 the numbers of trips fell by 60%. Sunak's deal with Macron last year boosted numbers a little but figures show only a 30% lift [Guardian / East Anglia Bylines].
Exports
Heading the other way are British exports. Though since Brexit these too have fallen off a cliff. British food sales to the EU have fallen by more than 16% on average across the three years since Brexit, with businesses blaming new border checks.
The report by the Centre of Inclusive Trade Policy (CITP) equates the financial figure to being a £2.82 billion a year drop in produce travelling from Britain to the EU [Sky News].
And it gets worse as the EU's General Product Safety Regulation (GPSR) will apply as of 13th December making it a requirement for businesses in third countries to carry out and record safety checks for items they wish to import into the EU bloc. Of course, this comes with a cost as well as yet more paperwork. The result, yet more small businesses giving up exporting from UK PLC [iNews].
There are of course other issues that Brexit has affected; immigration being perhaps one of the most contentious subjects. But economically Brexit has severely damaged the British economy and it's only likely to get worse according to economists [BBC].
BoE criticism
But while hardline Brexiteers may bleat about sovereignty - which was never really lost by being a member of the EU - to quote the US Democratic party strategist James Carville, "It's the economy, stupid!"
Simply put, if the economy is doing well, everything falls into place. If the economy fails it can lead to recession and even revolution.
Britain is unlikely to revolt. But the risk of a deep recession is very real [City AM] .
Of course money needs to be found to deal with the £22 billion deficit, and fund housing, infrastructural projects, the health service, etc.
But taxing a population who are already feeling the pain of Brexit repercussions, as well as the fallout from the war in Ukraine and the COVID-19 pandemic, will not improve matters.
Britain needs to attract investment, which in turn creates jobs. However, foreign investors are dissuaded from investing in the UK, primarily because of Brexit, due to increased red tape which makes exporting products to the EU more difficult logistically, and more expensive.
Tourism
There has been a fall in tourism to the UK since Brexit, especially school exchange trips. While new rules for French school trips were introduced in December 2023 there are concerns these may be affected by more Brexit red tape to come [Guardian].
And while there has been a slight lift in school parties heading to Britain since the former PM Rishi Sunak made a deal with the French last year, things don't always work out as intended. Earlier this month a minor paperwork error left 100 French schoolchildren stranded and forced to head back to their hometown after UK border officials refused entry.
The group of Year 6 students aged 10 and 11, had been eagerly anticipating their five-day trip to the Scottish Highlands. British border officials in Amsterdam refused them entry, citing incorrect information on the France-UK School Trip Travel Information Form, a mandatory document since Brexit for French students travelling to the UK. The error was a trivial one in that the school had mistakenly entered both identity card and passport numbers into the same section of the form, rather than separating them into their designated fields.
The 'jobs-worth' border guards could not be dissuaded by Dutch port officials who attempted to mediate and the students simply had to return to Saint-Winoc college in Bergues in northern France [La Voix du Nord].
The incident was not an isolated one. And while the news made headlines mostly in the French press, it is not good for Anglo-French relations.
Economically it is a disaster. French educational trips alone contributed around £100 million per year to the UK economy before Brexit [Schengen News]. But after Britain left the EU in January 2020 the numbers of trips fell by 60%. Sunak's deal with Macron last year boosted numbers a little but figures show only a 30% lift [Guardian / East Anglia Bylines].
Exports
Heading the other way are British exports. Though since Brexit these too have fallen off a cliff. British food sales to the EU have fallen by more than 16% on average across the three years since Brexit, with businesses blaming new border checks.
The report by the Centre of Inclusive Trade Policy (CITP) equates the financial figure to being a £2.82 billion a year drop in produce travelling from Britain to the EU [Sky News].
And it gets worse as the EU's General Product Safety Regulation (GPSR) will apply as of 13th December making it a requirement for businesses in third countries to carry out and record safety checks for items they wish to import into the EU bloc. Of course, this comes with a cost as well as yet more paperwork. The result, yet more small businesses giving up exporting from UK PLC [iNews].
There are of course other issues that Brexit has affected; immigration being perhaps one of the most contentious subjects. But economically Brexit has severely damaged the British economy and it's only likely to get worse according to economists [BBC].
BoE criticism
Soon after Rachel Reeves' budget the governor of the Bank of England, Andrew Bayley made a speech in which he said that Brexit had "weighed" on the economy.
"The changing trading relationship with the EU has weighed on the level of potential supply. The impact on trade seems to be more in goods than services, that is not particularly surprising to my mind. But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people," Bayley said [BBC / Guardian / BoE].
Bailey was attempting to be diplomatic in stating that the UK should "rebuild relations while respecting the decision of the British people." However, polls are increasingly showing that the British people's position on Brexit has clearly shifted [Guardian].
Labour pledges
The new Labour government has dismissed out of hand any notion that Britain should rejoin the EU, the single market or the customs union.
Politically it would be damaging, since the pledge not to rejoin was clearly set out in their manifesto. But at some point the government needs to wake up and smell the coffee before it is too late to turn the boat around.
Rachel Reeves speaks of being "disappointed" concerning figures showing Britain's economic slowdown and merely talks of "hope" that things might improve [Daily Mail].
Hopes & Dreams
But futures aren't built on hopes and dreams. Farmers might have hoped for a better harvest this year. Yet inclement weather this year has resulted in the second worst harvest on record. The wheat harvest in England is estimated to be down by 21%, with Britain's wine producers also hit hard. Some harvests are down by between 75% and a third, depending on the region [Guardian].
While this has nothing to do with Brexit, leaving the EU will make replenishing the shortfalls with imported wheat more costly for consumers in the coming months since imports will prove more expensive due to Brexit related red tape.
The economic slump and rising costs is only likely to increase a brain drain. Recent polls indicate that some 23% of UK adults are considering moving abroad in the next five years, with 12% contemplating emigration in the next 12 months [ifammagazine].
Such figures are of course speculative. A desire to leave won't necessarily manifest itself in reality since there are practical and financial factors that may thwart such a move.
Nonetheless it is concerning that ever growing numbers of the better educated and qualified are expressing the desire to jump off what might be perceived as a sinking ship, HMS Britain.
Change
So back to that 'black hole'. Should the current government make the decision to rejoin the EU, what would that mean in reality?
There would of course be political repercussions from the hardline Brexit headbangers within the Tory party and Nigel Farage's Reform UK. Such protestations could of course be stemmed by proposing a final binding referendum, now that the British public has seen the fallout from the 2016 Brexit decision.
Negotiations could then be discussed, in lieu of this, with EU counterparts with a proposal to implement article 49, and thus pave the way to Britain's rejoining the bloc.
The mere proposal to rejoin, while upsetting some, would likely increase confidence within business and could bolster investment from abroad if seen as a serious attempt at becoming a key player within Europe once again. This in turn could see deficits reduced and a rebuilding of the economy.
Of course there will be hurdles. And it could take up to ten years before being ratified - though there is a slim chance that this could be sped up if there was agreement on all sides.
A change of direction, rather than the 'make Brexit work' approach - which clearly isn't working, has a far greater potential of bringing back some buoyancy to HMS Britain and help turn the ship around.
Britain may still have some future, but not whilst it is sailing around in a rudderless ship without a clear set course, and from which greater numbers of passengers and crew are fleeing in whatever lifeboats they can find.
tvnewswatch, London, UK
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