It's People, Stupid!
Posted on January 24th, 2017
by Rab Bruce’s Spider
It’s the economy, stupid! When it boils down to it, politics generally focuses on the economy, and with good reason. We all know that there are some things in life upon which you cannot put a value; things like family, friends, and having a good laugh, but the fact is that there are very few people who can do without money.
this explains why so much of the conversation around Brexit is on predictions of economic success or disaster, depending on your point of view. Because of the threat of IndyRef2 becoming so inextricably linked with Brexit, we’ve also seen a resurgence in predictions of economic Armageddon should Scotland dare to break away from the UK. Both sides are bandying around comments on the relative sizes of export markets, on unemployment, growth, GDP and investment. The thing is, though, that many of these arguments are rather pointless.
Take exports, for example. There are “official" figures for how much Scotland exports to the rest of the UK but they are not very accurate at all, and nobody really knows the true figures. But it doesn’t really matter because, like the claims over the black hole in Scotland’s finances, the unionist assertions on exports are based on the fallacious presumption that an independent Scotland would continue to operate in exactly the same way as it does when its economy is largely controlled by Westminster. NO recognition is made of the possibility of doing anything differently, yet examples from other countries show that a newly independent country will begin to alter its trading profile and, instead of having its former partner or controlling state as its major trading partner, will diversify and trade openly with other countries. Ireland is perhaps the best example of this, because almost all of Ireland’s trade used to be with the UK, a situation which has changed considerably since Ireland gained its independence. The Czech Republic and Slovakia are other examples.
Naturally, each side in the Brexit/IndyRef quotes the statistics which favour its own argument. For example, Brexiteers will often cite the UK’s allegedly impressive growth and GDP, but will never mention growth or GDP per capita because these are not nearly as impressive. Indeed, they suggest that the UK’s growth is largely due to immigration providing the economic stimulus, a stimulus which will soon disappear if the Brexiteers get their way. They also generally ignore the UK’s enormous and ever-increasing debt, along with the associated economic ratios such as debt to GDP which generally show that even Greece is in a better economic position than the UK.
As for trade and what is going to happen, nobody knows yet, although one thing is fairly certain; trade won’t grind to an overnight halt. Whether in or out of the European Single Market, whether with official trade deals with other nations or with tariffs imposed, goods will continue to be traded. All that will happen is that there will be more hassle and prices will rise for the consumers. More on that in a moment.
As regards investment, there certainly are some large Companies which have said they will continue to invest in the UK, but there are others who have said they either will not, or that they have doubts. Even Nissan, who allegedly obtained written assurances from the Westminster Government, are making noises about re-evaluating their position in the light of the outcome of Brexit negotiations. But arguments about who is investing and who is not are fruitless, since both sides are able to cite Companies whose outlook favours their own. What should be far more worrying for the Brexiteers is the financial businesses in the City of London who are actively looking to move out of the UK because of the loss of access to the Single Market.
In the past few days, Morgan Stanley, Citigroup and, ironically, Lloyd’s of London, have announced plans to move elsewhere. Will we soon see Lloyd’s of Luxembourg?
The problem for the UK is that, after decades of systematically running down our manufacturing industries and concentrating business in the financial sector, the loss of these businesses will leave the UK potentially derelict. Trade deals are all very well if you have something to trade, but the UK doesn’t actually produce very much in comparison with its neighbours.
But with all these economic arguments going on, there is one very important aspect which is being overlooked. The reason for the importance of the economy is that it affects us all, although people rarely seem to get a mention in any of the discussions, most of which concentrate on businesses. This is why the Brexiteers usually ignore the devaluation in sterling, a devaluation which is, incidentally, significantly greater than the dire calamitous collapse which was predicted should Scotland have voted for independence in 2014, but which is now merely mentioned as a “correction" or “adjustment" in the market. That’s your UK media for you.
Allied to sterling’s plummeting value, inflation has already begun to creep up and will be further exacerbated should import tariffs become a feature of the UK’s future trading model. Added to that, the Bank of England is coming under increasing pressure to raise interest rates at some point this year.
All three of these factors (currency value, inflation and interest rates) will have immediate and direct consequences on the spending power of ordinary citizens. When you add in the potential consequences of financial businesses moving away, of falling inward investment and of the Tories’ stated desire to turn the UK into a tax haven where Companies pay even less tax than they do now, the outlook for ordinary people is pretty grim. That’s because, if Companies aren’t paying taxes, individuals will need to pay a larger share. When you add in all the other pressures on disposable income which inflation will bring, people are going to be hit where it hurts – in the pay packet.
Of course, it will, as usual, be the worst off in society who will suffer the most, and you can be sure that the wealthy political elite won’t suffer too much.
But this is all speculation, isn’t it? To an extent, yes, but the signs are already there, yet very few politicians are talking about the impact on ordinary people. And, worryingly, there is potentially worse to come. Because the loss of Workers’ Rights in the wake of Brexit will mean many people will be trapped in minimum wage, zero-hour contract jobs with minimal prospect of escape. The power of trade Unions, which was far too strong in the 1960s and 1970s, has all but evaporated, with the pendulum having swung so far in the opposite direction, it is hard to see how Companies can be prevented from exploiting their employees. When you consider that any recourse through the Courts or Industrial Tribunals is also rapidly moving beyond the reach of most workers due to the cost of pursuing any claim for unfair treatment, the social impact of the UK’s current course could be truly disastrous for a great many people. The disabled, the unemployed and the poor are already suffering grievously but this is now becoming the norm. Food banks are commonplace, yet the only solution the Government seems to have is to blame immigrants and foreigners.
If the Tories get their way, the UK will also withdraw from the European Convention on Human Rights. They will come up with plenty of seemingly plausible reasons for doing so, but you can be fairly sure that the consequences won’t be beneficial to the majority of people.
So, for all the talk about economics, the social impact is, for me, more important. We are speeding down this road towards a Red, white and Blue vision of a country that never existed except in the imaginations of the well-off, and it’s about time our politicians and journalists began putting this higher on the agenda.