Theresa May's Brexit speech headlines: Photo by Leon Neal/Getty Images
Jobs & living standards no longer top priority for government
Although her speech on industrial strategy on Monday could redress the balance a bit, the Prime Minister’s speech on Brexit last week confirmed that her government is putting jobs and living standards lower down their agenda than exiting the European Union and reducing migration. Is the era of Bill Clinton’s famous advice to his election team (“It’s the economy, stupid!”) over for British politics?
Brexiters make a lot of every scrap of economic good news to demonstrate that what they called ‘project fear’ during the referendum campaign was wrong, although as many keep pointing out, we haven’t left yet. But there are worrying signs too.
At the World Economic Forum in Davos, Nissan boss Carlos Ghosn appeared to backtrack on his earlier pledge to keep jobs and investment in Sunderland – which unions welcomed with relief – when he reacted to May’s speech. And for every good news story about increased manufacturing exports, there have been worrying indications that for retailers, the fall in the value of sterling will lead to higher prices (Next is reported to have already reduced its purchases of garments from Bangladesh because the pound’s fall in value makes them more pricey, and the company expects a slowdown in sales because wages will start failing to keep pace with inflation.) In addition, HSBC’s chief executive, Stuart Gulliver, told Bloomberg he was preparing to move 1,000 staff from London to Paris and Axel Weber, boss of Swiss bank UBS, told the BBC “about 1,000” of its 5,000 London jobs could be hit by Brexit.
GMB General Secretary Tim Roache commented:
“Fantastical speeches and wishful thinking is all well and good, but what does this actually mean for British jobs and industry in the coming years? A leap in the dark and political platitudes just won’t cut it for families trying to budget and plan for the future. When it comes to the day-to-day impact of the Government’s Brexit policy on working people, sadly it’s still as clear as mud.”
And Unite leader Len McCluskey said:
“Out of the single market, possibly out of the customs union, then investment in core sectors like car manufacturing, chemicals, aerospace, even food manufacturing, will be threatened as companies face hefty on-costs and serious disruption to their supply chains.
“I urge Mrs May to listen to the anguish of working class communities, not to add to it. Trading with nations that will not uphold our labour standards is not an acceptable solution – that trade will come with a heavy price tag, certain to be paid in the jobs, rights and wages of working people.”
May’s speech was, of course, based on the assumption that – despite ‘taking back control’ over free movement – the rest of the European Union will happily allow trade without tariffs on goods or regulatory restrictions on services. But she also said that if she fails to secure a deal allowing her to have her cake and eat it, she will allow the UK to simply fall back on WTO arrangements (itself not as easy as she suggests) meaning increased tariffs, reduced trade in goods and services, and the Government’s self-harming ‘Plan B’ of lower corporate taxes and protection-scrapping deregulation.
Plan B, of course, means turning Britain into even more of an offshore tax ‘heaven’ for big business and finance fat-cats (providing even less money for public services than austerity has provided over the last seven years) and a regulatory ‘hell’ for workers, consumers and the environment. Don’t expect the PM’s promise to protect workers’ rights to last any longer than a snowflake in a furnace (not that there will be any furnaces left once Plan B gets underway…)
The WTO option that is held out means tariffs of 10% or more for things like cars (and their components, many of which are traded rather than manufactured locally), clothing and food. Because the WTO doesn’t really cover services, they will be particularly badly affected, which is not good news when services account for about 80% of the economy. The trade deals that Liam Fox is tasked with securing will have to wait until the UK’s relationship with the EU is sorted out, and they will, at that point, be conducted with countries who know that Britain is writing off its relationship with the destination of roughly half our trade. They’ll know we’re desperate, and are no doubt already working out how they will take us to the cleaners (Australia and India will want more migration, not less; China and the USA would like to buy up British industry and public services, including the NHS, on the cheap.)
Even if we do negotiate a ‘soft’ Brexit (ie with much of our access to the single market kept intact, although that will require compromise on some of the Prime Minister’s red lines), we will still need to boost the UK economy to cope with whatever we lose. That does make the Government’s skills and industrial strategies very important: rather than leaving it all to the market, the government will need to intervene, and we hope that Monday’s speech will see the beginnings of a much more assertive role for government. Giving up on trade with the EU will require a lot of compensatory action.