In February, 2022, in an effort to reassure mutinous Tory MPs worried about the growing “partygate” scandal and a sequence of poor economic readouts relating to Brexit, former UK prime minister Boris Johnson did what most under-pressure political leaders do: announce a reshuffle.
The lipstick-on-a-pig routine rarely bears fruit when the scandal runs deep or touches such a raw nerve. The drip-feed of revelations related to Downing Street parties and other gatherings when families up and down the country had been denied the chance to say goodbye to loved ones dying alone in care homes and hospitals was too much.
In the end, Johnson just bought himself time. By July, less than three years after securing one of the biggest-ever election victories for the Tories, he was out.
One of the ministerial changes he made in that last-ditch February reshuffle was the appointment of Jacob Rees-Mogg as the UK’s new minister for “Brexit opportunities”.
The position had been created out of one of the junior ministerial portfolios at the treasury (minister for state for efficiency and transformation).
Johnson elevated it to a full cabinet position.
One of the first things Rees-Mogg did was to publish an open letter in the Sun newspaper bizarrely inviting readers to identify the possible benefits of Brexit to him.
The Brexit minister role is now vacant, seemingly ditched, reflecting the few if any Brexit opportunities that have materialised. Instead, the government is firefighting on a range of related fronts.
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Political impasse in Northern Ireland, logjams at Dover, higher-than-expected inflation, food shortages and waning economic growth can all be linked to the UK’s increasingly messy EU divorce.
Liz Truss’s failed tax-cutting budget, which forced a run on UK government bonds and a surprise Bank of England intervention, also pushed up borrowing costs and mortgage rates, higher than where they might have been.
Ryanair boss Michael O’Leary weighed into the debate in typically thundering fashion last week, claiming that ‘delusional’ Brexiteers would soon die out and a young, more pro-European UK electorate would eventually bring the country back into the EU
Rishi Sunak has brought some political stability to the equation but a myriad of problems remain.
Next up on the Brexit snag list is the introduction of import controls for goods coming into the UK from the EU, already deferred several times but now due to commence in September. They promise more trade barriers and more red tape.
With only three big banks left, are Irish consumers bereft of choice?
And then there is the proposed bonfire of EU legislation. If the Retained EU Law Bill, championed by Rees-Mogg, is approved, it will mean that, after December 31st, 2023, EU legislation in the UK will be wiped out, unless parliament votes to keep it.
Until now, EU laws – the Financial Times estimates there are about 1,440 – including bans on animal testing for cosmetics, passenger compensation rights, equal pay for men and women and pension rights for widows of same-sex marriages – were retained to avoid any gaps in areas such after Brexit.
Experts are predicting a legal minefield and there is growing opposition to the Bill from business, environmental groups and unions.
The Department of Finance here last week published its annual Stability Programme Update, setting out its financial projections for the year ahead as per the EU budgetary rules. It contained a section on the performance of Ireland’s main export economies, including the UK.
It looked at the evolution of UK output, productivity and investment since the beginning of the last decade.
“The most striking aspect is that, at the end of last year, the level of activity in the UK is not only 7 to 8 per cent below the level implied by the hypothetical no pandemic/no war scenario, it was also below its pre-pandemic level,” the department says.
Flagging productivity has been at the core of the UK’s stumbling economic performance since the 2008 financial crisis. The addition of high prices, increased interest rates and Brexit-induced trade barriers now threaten a perfect storm
“This is in sharp contrast to other regions such as the euro area and US, where activity has surpassed pre-pandemic levels and [is] almost back at levels implied by the pre-pandemic trend growth rate,” it states.
“These trends beg the question as to source of the headwinds holding back economic activity in the UK,” it says, while noting “this is far from an academic question, given the importance of demand in the UK for Irish producers”.
Flagging productivity has been at the core of the UK’s stumbling economic performance since the 2008 financial crisis. The addition of high prices, increased interest rates and Brexit-induced trade barriers now threaten a perfect storm.
“While several explanatory factors have been put forward, perhaps the most compelling relates to the relatively low level of business investment, which has essentially moved sideways since 2016,” the department says.
“One possible explanation for the stagnation in investment spending relates to heightened level of uncertainty regarding prospects for the UK economy upon exiting the European Union, with firms less likely to undertake large capital outlays against the backdrop of a more uncertain macroeconomic environment,” it says.
Ryanair boss Michael O’Leary weighed into the debate in typically thundering fashion last week, claiming that “delusional” Brexiteers would soon die out and a young, more pro-European UK electorate would eventually bring the country back into the EU.
O’Leary described the UK’s departure from the EU as “unbelievably messy” and a “net negative on the UK economy” and predicted it would end up signing a Norway-style deal with the EU in the next 10-15 years under which it pay into the bloc’s budget.
Many see Sunak’s Windsor Framework agreement and his move to improve relations with Brussels as the beginning of this process.
