Television news can be reductive and political sound-bytes sometimes fail to capture nuance and complexity. Yesterday, there was a good example. In a “pool clip” for the broadcasters, the prime minister said that No Deal would be “wonderful” and would allow Britain to “do exactly what we want” from January next year. When Boris Johnson spoke, he wasn’t indicating that No Deal is his preferred option or suggesting there won’t be significant drawbacks to it. In a concise way, I think he intended to encapsulate the following: The government’s official forecaster, the Office for Budget Responsibility, believes No Deal would rupture trade links with our largest and closest trading partner.
As Boris Johnson knows, the OBR calculates this would cause prices to rise, trigger several hundred thousand job losses and delay our recovery from the severe recession coronavirus has caused. The OBR assumes that No Deal would cause border disruption that would last for several months and that there would be long-term economic consequences too. The OBR estimates that the UK will be materially poorer and for several years if we don’t secure a free-trade agreement with the EU. The OBR set out its independent analysis two weeks ago in its Economic And Fiscal Outlook, which was published alongside the chancellor’s Spending Review. You can read it here. “Annex B: Brexit Scenarios” is your friend.
Of course, none of the above sounds terribly “wonderful” but while No Deal would damage our prosperity, it is also true that the UK would remain one of the world’s richest and most advanced economies. And economies are not inanimate and unresponsive, indeed quite the contrary. As a nation we would adapt to the economic shock No Deal would cause. Over time activity will adjust, new opportunities can be exploited, wealth can be created and shared. While No Deal would cause some limbs to whither, others have the potential to grow. There would be a period of adjustment and pain but there is no reason why, in the long-term, over perhaps a decade, the UK can’t rebuild and indeed thrive.
When Boris Johnson says No Deal is “wonderful” he is, I think fairly, expressing his absolute confidence in our ability to innovate and flourish whatever the outcome of the current trade talks. When he speaks of “doing what we want,” he is articulating his determination to deliver on the promises made during the referendum to “take back control” and secure the political independence he is seeking on fishing right, fair competition and the other issues which are currently being argued over. Difficult decisions lie ahead in the coming days and difficult decisions always involve trade-offs. Crudely put, the more political freedom and sovereignty the prime minister insists on, the greater the economic disruption he will have to accept.
There would be a price to No Deal. It would appear that it is currently the prime minister’s view that it is one that is worth paying.