If Brexit makes Britons poorer, they will come for Theresa May

Maturity is the realisation that adults do not know what they are doing. Grown-ups are not omniscient, just fallible humans trying their best in a difficult world.

Judged by this score, markets – even one as deep and old as that for foreign exchange – are immature. Sterling falls when Theresa May, their idea of the adult in the room, says something that portends a total British withdrawal from the EU. It rallies when she suggests compromise. Either way, investors assume the prime minister is working to a plan and scavenge for clues to its content that slip like crumbs from her high table.

Such innocence. The government has no plan beyond a preference for the end of free labour movement, which is why its panic-inducing remarks are usually smothered by softer gestures within days. Markets are reading design and coherence into improvisation under pressure. They overrate the role of strategy in politics and under-rate their own dynamic influence on events.

Sterling’s depreciation will, if it leaves consumers feeling pinched, change public opinion and government behaviour more than anything that takes place in Westminster. Had the pound writhed around like this before the EU referendum – and, in their desperate moments, pro-European campaigners willed it – we would now be reflecting on a nation that voted to stay in.

What should be a statement of the obvious has become a case to make from scratch: nobody knowingly votes for their own immiseration. It is not clear, even after the referendum, the rise of Donald Trump in the US and the boom in Europe's assorted populism, that western democracies are in a post-economic moment, with voters newly willing to forgo some material prosperity for the intangibles of cohesion and belonging.

Japanese trade-off

They are not making the Japanese trade-off – a less virile economy for a more familiar culture. At least not consciously.

Two in three Britons say they would not sacrifice a single pound of their income to reduce European immigration, a finding that should be more famous than it is. A plurality want the government to make trade with the EU its focus in the coming talks. These results vary a tad with the form of words in the question. They also appear to clash with the white heat of hostility to free movement that radiates from other surveys, from doorsteps and from the referendum.

But these contrasting signs are not so hard to reconcile. Voters do not recognise the Japanese bargain. They see no trade-off between tradition and growth. They want to curb free movement and rampant markets, and expect to do so at near-zero cost.

Leavers did not win the referendum by exploiting a new tolerance for economic risk. They won by refuting any economic risk. Britons did not brave the bleak projections of the Treasury and the professors, the international bodies and the domestic employers. They just disbelieved them.

If this is what happened in June, then fear for May and the politicians associated with exit. There is a world of difference between a mandate for painless change and a mandate for change at some material cost. The prime minister would be prudent to assume that voters are unprepared for a drop in their standard of living, that this is still a nation of amazing sensitivity to even minor changes in the way wages relate to prices.

If a consumer-rights campaigner such as Martin Lewis commands near-royal levels of affection, it is for a reason. If governments tend to fall not long after devaluations, it is for a reason.

Household anguish

For now, the anguish of sterling is a pictorial phenomenon: a line on a chart. Over time, it will become a household experience.

This depreciation has happened before the tabling of Article 50, before the inevitable deadlocks in negotiations and before Britain’s formal exit from the EU. It has happened before any adverse data on output or employment, and before ministerial fights or wounding resignations. This is why the gnomic Bank of England has resorted to plain speaking of late. It wants to prepare the country for higher inflation and for no monetary intervention against it.

Central bankers are not meant to lead the way in candour, but someone has to. Voters were never offered an honest deal in June: some economic loss for the higher treasure of national control. They were told that leaving the bloc entailed no cost, that money saved on EU budget payments might actually enrich them.

That is where their expectations are set. Much less and they will come for the government, or for the idea of exit, or for both.

Copyright The Financial Times Limited 2016