The British economy has survived so many crises that it can surely survive Brexit

William Keegan’s memoir describes with ebullient good humour how he covered half a century of bad news.

Nine Crises: Fifty Years of Covering the British Economy from Devaluation to Brexit by William Keegan

Bill Keegan thinks that of all the crises, dating back to devaluation in 1967, which he has covered as a journalist, “the prospect of Brexit is by far the greatest and most worrying”.

We shall see. I take a more complacent view. And some of the previous crises seemed pretty alarming at the time. Inflation peaked in August 1975 at 26.9 per cent.

But good journalists are not complacent. They communicate the drama of events. Keegan is very good at this. He shares his enjoyment and his insights, without pretending to omniscience.

He reminds us of the Queen’s great question about the crash of 2007-08, which had taken pretty much everyone by surprise: “Why did nobody notice it?”

Shortly afterwards, while presenting Keegan with the CBE, she asks him, “And what do you do?”

“‘I write about the economy for The Observer newspaper,’ I replied. There was a brief silence. Then I added, ‘I was one of the people who didn’t warn you.'”

In the hands of this ebullient and often self-mocking author, the dismal science ceases to be dismal. Here is an economist who does not suppose economics explains everything. His favourite subject is history, and in 1960 he went up to Trinity College, Cambridge, to read classics.

Keegan expresses his gratitude to the Jesuits at Wimbledon College who taught him Latin and Greek, but he opts to read economics instead, because he wants to understand more about what is going on, and reckons “I could study history for the rest of my life, whereas, if I did not have a go at economics, I probably never would”.

He discovers he prefers words to charts and diagrams:

“most economists…just loved charts. And economics was becoming increasingly mathematical. I was greatly relieved by the story told by a friend of mine, the late Sir Dennis Proctor, who had been a friend of Keynes. Proctor, a classicist, had asked Keynes, a mathematician, ‘Maynard, does one have to be a mathematician to understand economics?’

“‘No, Dennis,’ came the reply, ‘but one does need a sense of proportion.'”

What really interests Keegan is “political economy”, which he defines as “the relationship between economics and politics, and the discussions and battles that go on in public and private between economists and policymakers”.

On joining The Financial Times straight from Cambridge, he is initiated into an indispensable way of finding out about that world:

“It was drummed into me that lunch with politicians, officials, businessmen and City figures was an important part of the job. In effect, I was told to go out and spend the company’s money cultivating contacts.”

There are always people who are prepared to talk, if only they can find someone sympathetic to talk to. Enjoyment and the exchange of information go hand in hand, and the whole thing can when necessary be done discreetly.

After 1979, Keegan struck up a friendship with Ian Gilmour, one of the Tory wets who viewed with horror the economic policies pursued by Margaret Thatcher and Geoffrey Howe. He also plugged himself into the opposition within Whitehall:

“some of the officials who were having to carry out policies they did not believe in were happy to meet me, but only in secret. It was more than their professional lives were worth to be seen with ‘the enemy’ in public. There was one very important source for me who insisted on meeting in a curry house near Leicester Square where we were both quite certain that we would meet no one we knew.”

From 1964-67, the Labour Government of Harold Wilson made a “forlorn attempt to wish the obvious necessity of devaluation away”. Meanwhile the civil service secretly drew up a “devaluation war book”, detailing how the necessary currency adjustments were going to be made and the announcement handled.

This was stored in a safe with a combination lock. In November 1967, when devaluation took place, it turned out that nobody knew the code for the lock:

“The Treasury frantically telephoned Peter Jay, who had been private secretary to its top official at the time, and was now economics editor of The Times. Luckily for them, Jay remembered the code, which was the date of the 1949 devaluation, with the digits reversed.

“Jay did the honourable thing: he told the Treasury the code, but did not embarrass the government and his former colleagues by revealing what had happened, or taking journalistic advantage of it.”

There is a sort of generosity in Keegan’s account. Many of the people he meets are highly intelligent, and are trying to do the right thing, and even when, as often happens, they fail, he is disinclined to write them off as evil or malicious.

Episodes such at the three-day week of 1973 and the IMF crisis of 1976 are described without the sense of pessimism and almost unbearable national decline which they induced in some of us.

Keegan had a brief spell at the Bank of England, but the greater part of his career has been spent at The Observer, where Alan Watkins, whose greatness he recognises, was the political columnist.

There were some wonderful journalists at work in this period, a number of them (though none on the economic side of things) portrayed in Watkins’ book Brief Lives, published in 1982In the introduction he wrote for the new edition of that work in 2004, Watkins remarks:

“The representative figures of the age of Wilson and of Macmillan’s England who are depicted here possessed, with some exceptions, a rationality, an optimism and a capacity for the enjoyment of life which their successors do not always, or even usually, exhibit today.”

With rare exceptions, Keegan is generous about the politicians and officials he get to know during this half century. They include Nigel Lawson, a distinguished journalist before becoming Chancellor of the Exchequer.

Keegan is highly critical of Lawson as Chancellor. “Still writing the same old rubbish,” Lawson delights in saying whenever they meet, to which Keegan replies, “Still pursuing the same old policies.”

But when the owners of The Observer want to sack Keegan for being so hostile to the Thatcher government, Lawson, as Chancellor, confounds them by saying, when lunching at the paper: “I read William’s column. I don’t always agree with it. But I wouldn’t be without it.”

The only Chancellor Keegan cannot stand is George Osborne:

“there was something about the cynical way that Osborne introduced his austerity programme which, frankly, got beneath my skin…It mattered not that in opposition Cameron and Osborne had supported Labour’s public spending programme. With blatant disingenuousness, the new Chancellor and his colleagues now blamed the crisis on Labour’s ‘excessive’ public spending.”

In Keegan’s view, Osborne’s misplaced policy of austerity was not just the wrong way to promote economic recovery, flying as it did in the face of Keynes’s insight that the only way to emerge from recession is to spend your way out.

The policy of austerity also helped cause the No vote in the EU Referendum: a disaster in Keegan’s opinion, though he still hopes “this movement to what I regard as a cliff-edge can be stopped”.

Yet the overall effect of his book is cheering. The British economy has survived and prospered after so many crises it can surely survive Brexit.

Stephen Booth: Brexit and the economy. There are ups, there are downs. But whatever happens, our fundamentals remain strong.

A flexible labour market, a well-regarded legal system, and comparatively favourable demographics relative to the major European economies are all valuable assets.

Stephen Booth is Director of Policy and Research at Open Europe.

As the ongoing Brexit saga continues to drag towards the 29th March without resolution, every announcement or scrap of economic news is greeted by hard-line Remainers or Brexiters as proof positive of their arguments. Nuance is no use to either extreme in this debate. In reality, since the referendum, there have been positives and negatives but, overall, the economy has held up relatively well compared with the political wreckage that Brexit has been causing in Westminster.

After retail sales figures outstripped forecasts in January, the consultancy Oliver Wyman suggested the reason for this pleasant surprise was that consumers might be stockpiling for a No Deal Brexit. This might have tallied had the boost been attributed to a spike in the purchase of tinned baked beans, but Office of National Statistics figures illustrated that sales of discounted clothing were the biggest driver. Are we really stockpiling jumpers?

Japanese carmaker Honda’s decision last week to close its Swindon plant provided the latest opportunity to confirm our prejudices. Some rushed to cite Brexit as the cause, before Takahiro Hachigo, Honda’s chief executive, stated that “Brexit was not taken into account” in the decision. Moves towards emissions-free vehicles, over capacity at the Swindon plant and the removal of tariffs under a new EU-Japan trade deal seem to be the prime reasons for the closure. After all, Honda is not closing its UK plant in favour of another location inside the EU market, or another European country with more certain access to it. Indeed, it is also closing its plant in Turkey, which has a customs union with the EU.

However, Brexiters should not take comfort from this episode. Rightly or wrongly, many outside the UK see Brexit as damaging to “Brand Britain”. Equally, it is very hard for companies like Honda to “blame” Brexit because they risk a consumer backlash. Blithely dismissing businesses’ legitimate concerns about uncertainty or the impact of a No Deal Brexit as a rerun of “Project Fear” does nothing to dispel this instinct. Even if only a minor contributing factor, Brexit uncertainty was a very useful excuse, at the very least, for Honda to pull the plug in Britain. To reiterate the degree of uncertainty facing businesses, we are just five weeks away from a potential No Deal Brexit and we are still eagerly awaiting an announcement of what tariffs the government intends to levy on imports from all over the world.

Ultimately, each isolated case is complicated and can only tell us so much. The wider reality is that, in 2016 and 2017, UK growth was sluggish in comparison to the global upswing. But in its January forecast, the IMF forecasts that, following an orderly Brexit, the UK growth rate will converge with France and Germany at around 1.5 per cent in 2019 and 2020. The European Commission expects the UK to marginally outpace Germany in 2019.

According to Gertjan Vlieghe, an External Member of the Bank’s Monetary Policy Committee, the reason for the UK’s comparative underperformance is that while business investment has grown strongly across the G7, it has stalled in Britain. Given the seismic nature of the Brexit vote and the political fallout it would be surprising if many businesses weren’t hesitant to invest. Getting a deal through which provides for an orderly Brexit might unlock some pent-up investment. However, it is difficult to see how a No Deal Brexit or Article 50 extension in the hope of a second referendum would provide businesses with the confidence they crave.

On the other hand, despite a weakening of the pound, consumer spending has on the whole remained buoyant and reflects the UK’s strong labour market performance. Employment is at record high levels, and wages are rising faster than inflation. The Government recently posted its largest January revenue surplus since records began in 1993.

Looking to the longer term, the UK’s economic fundamentals remain strong. A flexible labour market, a well-regarded legal system, and comparatively favourable demographics relative to the major European economies are all valuable assets. In and of itself, Brexit will not be a life or death matter for the economy. As consumers and supply chains adjust to whatever new trade barriers arise on both sides of the Channel, there will be winners and losers. This is the inevitable reality of altering years of deep economic integration.

However, onlookers and potential foreign investors might wonder whether the fundamentals of our politics are as sound. Parliament has so far been found desperately wanting in what is only the first stage of Brexit. Many MPs on either side are still intent on debating Brexit as a matter of principle rather than pragmatism, two-and-a-half years after the referendum campaign. There must be major doubts about their ability to wrestle with the real-world challenges and decisions required to reshape Britain for the big, wide world outside the EU.

Leaving the EU on WTO terms will make our businesses more competitive and innovative

At the end of last year, the Global Competitiveness Report ranked the UK as the eighth most competitive country in the world, praising its ‘very well-functioning markets, a top innovation ecosystem and vibrant business dynamism’. However, the top-performing countries in the 2018 study by the World Economic Forum were dominated by non-EU countries including the […]

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At the end of last year, the Global Competitiveness Report ranked the UK as the eighth most competitive country in the world, praising its ‘very well-functioning markets, a top innovation ecosystem and vibrant business dynamism’.

However, the top-performing countries in the 2018 study by the World Economic Forum were dominated by non-EU countries including the United States, Singapore, Switzerland and Japan.

Despite this, politicians, businesses and the media appear to cling on to our ties to Europe. Leaving without a deal with Europe has been brandished as the height of irresponsibility, falling off the cliff edge and other such fearsome but conjectural words. Yet in reality 98 per cent of world trade occurs within the World Trade Organisation (WTO). The UK is a member of this global platform.

For my companies the horizons have always stretched far beyond continental Europe. Corrocoat, for instance, exports 68% of its anti-corrosion products globally and less than 10% of that goes to Europe, whilst Glassflake exports over 80% of its output with only circa 7% to Europe. We have operations in some of the most exciting, fastest-growing places in the world such as South Africa, Indonesia, Thailand, Malaysia, China and the United States.

The EU has stifled growth with its rules and regulations, reduced appetite for competition and hindered the sort of innovation and entrepreneurship that has made both our sister companies Corrocoat and Glassflake success stories.

Companies do need to prepare for a WTO exit, but the myths around a no-deal scenario and fear of the unknown have wrongly led us to believe that vital sectors in our economy are at risk.

In actual fact, departing on WTO terms will act as a catalyst for businesses to become more competitive and more innovative. Gerard Lyons, a leading British economist, has argued that stifling EU regulation has made UK exporters less competitive and less productive in global markets whilst also doing little to increase wages. Only once the UK is open to trade with the world can we reverse this trend.

The IMF estimates that 90 per cent of global growth in the next 10 to 15 years is likely to come from outside the EU. If the UK goes back to bulldog Britain instead of the pussycat Britain it has become under the EU, it can be part of this global success story. We should embrace such an opportunity instead of listening to the hearsay and doom-mongering.

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Chloe Westley: A message to Remain politicians and their second referendum plot. Vote Leave 2 will end your careers.

These politicians have no idea about the wave of contempt that will engulf them, just as they didn’t understand England outside the M25 in 2016.

Chloe Westley is the Campaign Manager of the TaxPayers’ Alliance.

Last week, 25 Conservative MPs voted to give themselves and others the power to stop Brexit. After first voting to hold a referendum, and then standing on an election manifesto to deliver on the result of that referendum, these MPs have concluded that their collective wisdom is far superior than that of the 17.4 million who voted leave, or the 13 million who voted for the Conservative Party on the understanding that Brexit would be delivered. Labour MPs who voted for the same motion have also reneged on their manifesto pledge to take Britain out of the EU.

They truly believe, that of the millions of people living and working in Britain, it is only they – the few hundred who sit in Parliament – who are of sound mind and judgement to decide what happens in this country.

The motion in question about a meaningful vote – which seeks to give MPs the ability to stop or delay the Brexit process if May loses the vote on her deal next week – isn’t legally binding. But it would be politically difficult for the government to ignore. It also provides the rest of us with a list of MPs who is trying to stop Brexit.

Since the election last year, MPs have been sheltered in Westminster, surrounded by friendly Remain-supporting Londoners, comforted by the pro-Remain bias in the media, all patting themselves on the back about just how much smarter they are than all those deplorable Leave voters. They’ve convinced themselves that, even after a majority voted leave in 2016 and for pro-Brexit parties in 2017, it didn’t really mean to.

The establishment view, as it stands, is that the majority of the population are too stupid or uneducated to stake a claim in Britain’s future. They are there to work hard and provide tax and wealth to the state – but their opinions must not be heard. This view was characterised best in this interview with Guardian writer Howard Jacobson. “You can’t trust the people…you can be certain the people will get it wrong” he says, before expressing his profound horror that “the people (have been) given this new confidence in their own opinions.”

Whilst MPs who voted for Grieve’s amendment would never admit to being that arrogant, I am sure that some would find themselves nodding along in agreement. In order to justify ignoring the expressed will of the British people, anti-Brexit MPs express profound concern for their wellbeing and proclaim to be their saviours.

If Theresa May’s deal is voted down this week, politicians have threatened to seize control of the process and, if needs be, postpone Britain’s exit from the EU. Democracy hangs on a knife edge. What is decided this week could determine whether Britain’s proud democratic tradition is restored or destroyed.

Vote Leave was successful because it mobilised a desire for change that has been brewing in this country for decades. We were outspent by millions of pounds, we were up against the UK Government and entire civil service, the OECD, the IMF, the EU-funded CBI, the Treasury, the Bank of England, the cultural elite, Barack Obama – and yet the majority of voters heard our call to take back control.

Vote Leave’s vision was global, practical, positive. Taking back control of law-making powers, a skills-based immigration system, trade deals around the world, taxpayers’ money spent on the things that matter. This vision was popular and the country voted for it. It was a blueprint for change.

We proposed that the UK Government should not commit to the Article 50 process, which was designed to stop countries leaving the EU and that triggering Article 50 before having a plan and before making preparations would be ‘like putting a gun in your mouth and pulling the trigger’ (read Dominic Cummings, Vote Leave’s campaign director, on this matter here).

The Remain-voting Prime Minister and Chancellor did the exact opposite of all of these three things – and now they tell us we’ve got no choice but to surrender because they totally failed to prepare to leave without a deal. A second referendum would not be about Britain’s membership of the EU, or about the final deal. It will be about Westminster.

Anti-Brexit politicians seem to think they’ll be able to persuade the public that Westminster’s failure was inevitable because ‘Brexit is impossible’. These politicians have no idea about the wave of contempt that will smash them when they make this argument, just as they didn’t understand England outside the M25 in 2016.

Make no mistake – Vote Leave 2 would be every Remain politician’s worst nightmare. Our argument is made stronger by every vote against democracy, and every MP proclaiming that people didn’t know what they were voting for. You are confirming Leave voters’ worst fears.

It’s not just the European Union that makes a mockery of democracy: its British politicians.  Vote Leave 2 would be career-ending for those who promised to respect the referendum, promised 2016 was ‘a choice for a generation’, stood on manifestoes to leave the Single Market and Customs Union – then completely betrayed all of these promises.