Britain never really loved the EU. We didn’t join the Common Market because we loved Europe or bought into a pan European vision,
We signed up because we were in the doledrums as a nation. We had lost an Empire, and not really worked out a role in the world. The excitement of the 60s with a world cup win and the Beatles had given way to the bleak 70s. Our manufacturing was in terminal decline, the balance of payments a recurring problem. Real wages has risen through the 60s and for the first time working class people could afford a foreign holiday or a new car, even if it did have a square steering wheel. But by the time of the oil price shock wages were already stagnating and Unions were becoming more militant in response. Power cuts, the three day week, and endless BBC 2 post apocalyptic dramas.
We had abolished rationing in the 50s but by the 70s we had restrictions on sugar and flour due to supply problems. The sense of decline was palpable.
Joining the EU was a last throw of the dice by a Conservative Government that had run out of options. The sense of failure that accompanied Britains application for membership would haunt the Tories for generations.
Mostly it worked out pretty well. We joined at the time of the Wine Lake and the Butter Mountain, 2 of my favourite geographical features, and over time our diets were transformed. We learned to eat humous and pesto and drank wine. Maggie Thatcher’s single market made us an attractive destination for inward investment, and industries such as car production was reinvigorated by European and Japanese car manufacturers investing in order to export to the EU.
The City of London becoming Europes financial centre, and it’s services capital, helped by de-regulation. The Manhattan of Europe.
The single market gave us access to customers all over Europe, but it also made us compete on cost and quality. British business investment levels reached the G7 average. Well educated, entrepreneurial people did well, and had living standards comparable with the best in Europe; British household incomes were actually higher than in France or Germany.
But not everyone felt that they were sharing those benefits, despite lots of EU funds targeted at poorer regions like the North East. For people who didn’t have qualifications, or high level skills, instead of competing against the Germans and the Spanish they found themselves competing against Romanians and Poles, many of whom came to work in the UK. Despite the protections of the national minimum wage some found themselves marginalised in the workforce pushing into bogus self employment as uber drivers and deliveroo riders where the NMW offers no protection.
The Tory sense of failure of joining the EU festered, and created a Eurosceptic movement sustained by lots of money and press attention, some of which didn’t necessarily have Britains best interests at heart. Press articles about straight bananas and the Euro-sausage were loudly promoted by people whose real aim was to remove workplace and environmental regulations.
And so we voted out. The people who came to power post Brexit didn’t really have a plan for what happened next, but they did have an ideology driven by free markets and deregulation. We would strike “free trade” deals outside the EU, which wold more than make up for the trade we lost.
The free trade deals proved to be an illusion. We rejected a very sensible deal the EU offered us based on regulatory alignment because we wanted to sign lucrative deals with the US promised us by Donald Trump. Instead we insisted on a much worse deal based on rules of origin, only for Trump to renege and leave us in the cold.
The free market approach to Hard Brexit means we now had to compete with countries outside the single market; Turkey, Bulgaria. Our real wages and living standards have to fall to compete on cost with those countries.
I am generally pro-immigration – without it we will have a shrinking, ageing population and a shrinking economy, but even I was shocked at the arrival of over 700,000 in one year. Those without particular skills and qualifications now compete for work against incoming Bangladeshis and Nigerians rather than Poles and Romanians.
This is the consequences of Brexit, and in particular of the type of hard Brexit and free market ideology that the Tory party chose. If we are to compete against Turkey and Bulgaria we need to lower our labour costs to their level. Some of that can be achieved by devaluing our currency, although that causes inflation. But some of it will have to happen by a reduction in living standards – a fall in real wages until we are competitive with countries. And for those who can’t compete they will have to fight for work against Bangladeshis and Nigerians who will work more cheaply.
Hard Brexit, falling living standards and increased immigration are all irrevocably interlinked. The recent falls in living standards were always a feature of Brexit – we will have to keep getting poorer until we are competitive with Albanians, Kosovans and Turks. High inflation is caused in part by war in Ukraine – but the UK suffers worse because Boris’s bodged Brexit drives up the prices of imported goods, particularly with the Pound worth less.
The logical answer is to go back into the single market and the customs union. This however is off the table for the next few years, due to the petulant behaviour of successive Conservative politicians. the EU aren’t interested.
Instead the 2 main parties offer 2 different solutions:
The Conservatives offer more free market ideology. This can only lead to sustained falls in living standards until we can compete on price with Turkey and Bulgaria. Falling living standards aren’t an accident. They are part of their economic strategy.
Labour are rather coy about their offering – a combination of more workers rights and protection, and an attempt to reserve globalisation and bring more supply chain work back to the UK – in effect invest so that companies like Nissan source more of their components close to their factory.
Some people have expressed scepticism about the scale of Labour’s ambitions, and the chances of success, but unless there is a fundamental change of approach to the UK economy falling living standards are here to stay.
We now find ourselves back where we were in the 1970s. Declining economy, falling living standards, high inflation, unsure of who we are, or our role in the world.