Opinion: is Brexit on the way out?

London, UK: Government and the opposition have been careful to avoid any discussion of Brexit following former prime minister Boris Johnson’s deal to “get Brexit done”.

Yes, like the proverbial elephant in the room, Brexit has simmered behind almost every issue facing government and business. But Britain’s stressed economy is turning up the heat on Brexit.

Without doubt, Britain’s sudden removal from the single market has triggered a raft of problems for business, most especially the logistics industry, and those handling food. And we are now seeing more accurate numbers to measure the effect of Brexit. The Office for Budget Responsibility, in the forecasts that underpinned last week’s autumn statement, said Brexit has had “a significant adverse impact on trade”, and that the OBR’s original prediction of a 4% hit to GDP was being borne out by real-world data.

Only a few fanatical Brexiteers now argue that Brexit has not been the most unmitigated disaster for the British economy. And with almost everyone preaching the “growth is needed” mantra, criticism of Brexit and demands to end it in some form or other are getting louder.

At this week’s Confederation of British Industry conference the message was clear: Brexit isn’t working for business and the government is failing to deliver policies that will help growth recover.

Conservative prime ministers usually relish their speech to the CBI conference. Boris Johnson bemused the business world in 2021 with an almost imbecilic garbled speech with its references to Peppa Pig World.

This year, Rishi Sunak delivered a more intelligent effort that at least had clarity with his statement that he “believed in Brexit”. What he could not do was reconcile an urgent desire for economic growth with a Brexit deal that has not, by common consent, delivered the promised dividend, and by most metrics has demonstrably damaged the economy.

The Times newspaper pre-empted his speech by reporting a “senior government source” saying Sunak’s government was considering moving to a Swiss-style accommodation with the EU. That would mean negotiating access to the single market in exchange for making payments to the EU and allowing freedom of movement.

The report triggered instant anger from Conservative Brexiteers, forcing Sunak into an immediate denial. But CBI director general Tony Danker urged the government to get the politics of Brexit out of businesses’ way, calling for migration rules to be eased to allow companies to hire the staff they need, and pointing out that migration was the only factor delivering growth to the economy. He called for the prime minister to settle the dispute over the Northern Ireland Protocol, a key part of the ill thought out free trade agreement negotiated by Boris Johnson.

Danker is doing nothing other than reflecting the growing body of evidence on the economic damage that Brexit has caused – indeed many regard Brexit as the greatest act of economic self-harm in living memory. The benefits of the free-trade deals that were sold by Brexiteers have failed to materialise.

And even those who negotiated those deals, such as former environment secretary George Eustace, admit their limited value. Eustace told Parliament that the Australia deal was “not very good” and that “the UK gave away far too much for far too little in return.”

The barriers imposed by Brexit have been amply highlighted by the UK sliding into recession with the worst-performing post-pandemic economy in the G7. Businesses face increased costs, bureaucracy and restricted access to the UK’s closest and largest trading partners. Former chancellor Kwasi Kwarteng’s £45bn tax-cutting spree, which fundamentally undermined financial stability, has within weeks been replaced by Jeremy Hunt’s £55bn of tax increases and spending cuts “to deliver stability”.

Sunak’c speech to the CBI seems not have business in mind but rather his party’s Brexit-supporting right wing. “On trade, let me be unequivocal about this. Under my leadership, the United Kingdom will not pursue any relationship with Europe that relies on alignment with EU laws,” he said.

“Now I voted for Brexit. I believe in Brexit and I know that Brexit can deliver, and is already delivering, enormous benefits and opportunities for the country – migration being an immediate one, where we have proper control of our borders and are able to have a conversation with our country about the type of migration that we want and need.”

None of this is what business wants to hear.

Business reasoning is that if government wants growth then it needs to provide the right environment and the tools for business to deliver growth.  Stifling Britain’s trade with its largest trading partner, which is the effect of Brexit, is now clearly seen as a hinderance. It’s time for government to act and end this absurdity.

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