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Brexit: Britain’s political tragedy poses a dire warning for Australia

by Michael West | Jan 1, 2023 | Economy & Markets

Brexit’s a dud. The UK economy has shrunk. Almost 17 million Brits live in poverty. And there are large lessons for Australia. Michael West reports.

The momentous decision by the UK to leave the European Union has left it as the only member of the G7 with an economy smaller than it was before the Pandemic. The US, Canada, France, Germany, Italy and Japan have all grown.

The British pound has cratered, rendering imports more expensive, inflation is in double digits, debt at record levels, trade has been hammered; the UK Office for Budget Responsibility, the body which produces economic forecasts for the government, expects Brexit to reduce Britain’s output by 4% over 15 years compared to remaining in the EU trading bloc. 

As Prem Sikka, accounting professor and Labour member of the House of Lords, puts it, “The UK has become a poor country with a lot of very rich people in it. 

“Just 250 people have wealth of £710.723bn whilst average real wage of workers is less than what it was in 2007. 

“Some 16.65 million live in poverty. The poorest 20% in Ireland have a standard of living almost 63% higher than the equivalent poorest in the UK. Most people don’t have the spending power to rejuvenate the economy and no major political party is pursuing equitable distribution of income and wealth.”

Glass half full, or a tenth

Is there anything good about Brexit? The press and political classes are mostly yet in denial. Champions of the “Leave” vote are struggling to cherry-pick data to defend it, to argue against the weight of evidence that cutting ties with the single market has brought mayhem to the economy.

Border port delays, rampant energy prices due to fewer energy providers, labour shortages in health and social services, the National Health Service under severe strain, food shortages and rising food prices, fishing disputes – the list of poor outcomes is long. More than 7m people waiting for a hospital appointment.

And, like Australia, wages have stagnated. So despite the apparently benign official jobless figures, there has been a rise of the working poor.

At BT Group’s Newcastle call centre, despite the group’s £1.3bn profit last year, staff set up a “community pantry” for workers. BT denied it was a “food bank” but the truth is clear; wages are so low that workers can hardly afford essentials.

Australia wins free trade deal

When Brexit’s hard borders were imposed, they curtailed the flow of cheaper European labour as well as the flow of goods and services. With the cost of living soaring due to rising food and energy prices there came the rise of demands for higher pay, accompanied by a rise of the unions and industrial action.

As one British MP told Michael West Media, “It’s the first time in 100 years that nurses have gone on strike, the people that helped us through Covid. There is upward pressure on wages.”

There is also a small silver lining for Australia, ironically. Despite the government boasting that it has secured “new trade deals worth £800b pounds with 70 countries”, two of the deals they have actually secured with smaller nations far away – New Zealand and Australia – are being lambasted as duds. There is yet to be a free trade deal struck with any major trading bloc.

The deals with “70 countries” element of the spiel has been debunked as “complete bollocks” by critics as the vast majority of these are simply existing trade arrangements rolled over. Even the official statistics watchdog has corrected the record.

As for the Free Trade Agreement with Australia, George Eustace, a Tory MP formerly on the trade subcommittee has even debunked the spin: “The first thing is to recognise that the Australia trade deal is not actually a very good deal for the UK. The truth of the matter is that the UK gave away far too much for far too little in return.

George Parker, political editor of the FT: “We lose 4% of our GDP by Brexit. We gain 0.08%, by the Govt’s own estimate, through this trade deal with Australia.”

The Kiwi deal is even worse, its tariff free meat imports leaving British farmers up in arms. On a global scale, Brexit reflects the rise in protectionism. Feeling the scourge of cheap Chinese imports, the US too has moved to restore domestic manufacturing capacity.

A neo-liberal catastrophe

Sadly for the UK, once famed for its aerospace, its automobile makers, manufacturing too has shrunk. It’s not just Brexit but the dismal failure of neo-liberal policy. As Prem Sikka puts it in this piece.

“The elites have transformed the state. Instead, of an entrepreneurial state which once invested in biotechnology, aerospace, information technology and other emerging industries, it now guarantees corporate profits to enrich a few.

Private Finance Initiative (PFI) and outsourcing of state functions was an early bonanza. Successive governments have handed publicly-owned industries to corporations at knock-down prices. This includes, oil, gas, railways, ports, prisons, mail, aerospace, information technology, biotechnology, shipping, mining, steel, automobiles, social care and large parts of the National Health Service. Yet there has been no economic renaissance.

“The homeless and poor can’t be housed because council houses sold by the government have not been replaced by affordable homes. There isn’t much left to sell to feed rentier capitalism.”

Lessons for Downunder

Privatisation too in Australia has been a miserable failure. Yet just like the UK, where the government, and the Opposition for that matter, rallied to the cry that things were better in the hands of “the market”, there was no evaluation – no proper modelling, analysis and public debate about the benefits of privatisation versus the costs. Neither of Brexit for that matter.

How could it possibly happen? Reckless populist politics and a captured media; that’s pretty much it. The FT has done some interesting work on fear-mongering and xenophobia in the press which led to Brexit.

The Murdoch press, as well as tabloids the Express and Daily Mail, exploited nationalism and fears of immigrants leading into the Brexit vote, just as the Murdoch press here – and other corporate media – exploited the fear of China and asylum seekers to entrench the conservative government of the LNP. to cling to power at the last two elections.

It was the media which manufactured consent, and consent for Brexit has meant a catastrophe for the British people, particularly the lower and lower-middle classes.

And so it is that the denial and the lies by the political classes continue to mount. As in Australia, the corporate media – in the face of rising social and independent media – has become ever closer to the political elites, ever more ready to propound the lies and misinformation. The billions in funding promised for the NHS has not materialised, the benefits from tax cuts have not materialised, and the Brits now face austerity measures.

GDP projections for the new year, 2023, are for zero growth.

At least, confronted by the drastic rise in energy prices and millions of people left freezing in winter, the government introduced a 25% windfall profits tax on fossil fuel producers and extended it to electricity generators. Brexit and the incompetence of the Tory government are surely warnings to the Labor government in Australia as to its timid energy policy measures, the failure of neo-liberalism, privatisation, the scourge of money in politics and a captured media, and the futility of the Stage 3 tax cuts.

In the least, governments should conduct proper independent analysis and public debate before making any significant decisions because, inevitably, the media will side with powerful corporate interests before the interests of the people.

Fossocracy Australia: government of the people, by the fossil fuel companies for the fossil fuel companies

Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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