The aftermath of Brexit

In one of his many wartime speeches, Winston Churchill uttered the famous words: “never was so much owed by so many to so few”. Playing with those words, in the context of Brexit, it is tempting to change it to: “never did so many suffer from the mess created by so few”.

You probably know who I am thinking of. If not, let me give you a hint, and I am not thinking of Boris Johnson, although he also did his very best to mess it up. No, I am thinking of a Conservative Party leader, who was Prime Minister for an ‘impressive’ 49 days in the autumn of 2022. Yes, her name is Liz Truss and, if she doesn’t yet realise how much of a chaos she left behind, she is either very stupid or a bloody good actress.

Now, almost 2 ½ years after she did her best to go down in history as the worst PM ever, pension funds all over the UK are still fighting the fires she started. Just as most members of the infamous MAGA cult in the US would vote for Trump, even if he committed murder live on TV, a substantial number of Brits still believe it was right to leave the EU despite all the chaos left behind (Exhibit 1). Unfortunately, I haven’t been able to find a more recent poll with that question being asked, but nothing I have heard or read suggests to me that a meaningful change in public opinion has taken place over the last year or two.

I have also noted that the MUKGA disciples in this country are still trying their very best to learn from the MAGA cult in the US. If you subscribe to The Daily Telegraph, take a look at this article, where the author suggests Trump can still make Brexit a success. Apart from the fact that failure is a rare admission coming from this newspaper, the article would probably do better in a Monty Python show.

Moving on to more serious matters, according to the latest YouGov poll on the issue from August 2024 (see here), 62% of all Brits now think Brexit is more a failure than a success. However, that doesn’t translate into the same number being in favour of rejoining the EU (Exhibit 2) which raises the obvious question: what then?

Statista did another poll in May of last year (not shown here) which suggests that the two fronts have hardly moved over the last couple of years. A majority of Brits seem to agree that Brexit has indeed been quite painful, but about one-third of those participating in the Statista poll continue to think it was right to leave – a number which has been quite stable since the summer of 2022.

What’s next?

Back to the question raised earlier – what then? Sir Keir Starmer has been adamant that there won’t be another EU referendum on his watch. That said, his body language has definitely changed more recently. Late last year, he outlined his “plan for change” (see here) and, although there was no explicit mention of EU membership, since presenting his ideas, more than once has he mentioned the need to establish a more robust working relationship between the UK and the EU. The public seems to agree with that – see Exhibit 2 again.

I continue to believe that the UK will eventually have another referendum on EU membership but only when a new generation of political leaders have replaced the current ones, i.e., 10-15 years from now at the earliest. In the meantime, it will be about getting the best out of a miserable situation. See also the post scriptum to this letter.

The economic muddle in other European countries – mostly EU member states such as Germany and Italy – comes quite handy in that respect. Suddenly, subdued economic growth in the UK looks quite sparkling by comparison (Exhibit 3). The risk, of course, is that Brexiteers will use it as an argument in favour of their stance – “see what we said; we do much better outside than inside the Union” – but, apart from that risk, weak economic growth inside the Union makes it far more likely that the remaining members will be prepared to reach a compromise with the UK. It is also worth reminding ourselves that membership of the EU is no guarantee of economic success. Foolhardy policy decisions like those made by the German government under Olaf Scholz more recently (more on that another day) are proof of that.

Let’s not forget that, at the end of the day, membership of the EU is about getting access to the biggest free trading platform in the world. Everything else is noise. All over the world, for hundreds of years, the primary driver of economic growth has been international trade. If Britain wants to reinvigorate its failing economy, it is therefore critical that it is willing to swallow a bit of pride and come to a solution with Brussels. As I stated earlier, I do believe Sir Keir Starmer is aware of that. He just needs to be careful not to upset Labour voters (too much), as many of them continue to support the decision to leave the EU made in June 2016.

Final few words

And to all our American readers who may think this is irrelevant as far as the US is concerned, you need to think again. Sky-high tariffs and the deportation of millions of illegal immigrants will have the same dreary impact on the US economy as Brexit has had on the UK economy. Maybe you can draw some comfort (if that is possible) from the fact Liz Truss is openly supporting Donald Trump now. As she said during a recent trip to Washington DC:  Donald Trump’s second presidency “can’t come soon enough”.

Niels

3 February 2025

Post Scriptum

New readers of the Absolute Return Letter may assume that I am a hardcore EU supporter, but nothing could be further from the truth (seasoned readers already know my views on this topic). I have, over the years, come to realise that the whole EU set-up is defective at best. That said, and as I pointed out above, at the end of the day, membership of the EU is about getting access to the biggest free trading platform in the world. Everything else is noise. Continued access to that platform therefore requires that you swallow some pride from time to time. Nothing comes for free. I just wish more Brits would be willing to do that. The country deserves better than the turmoil it is in now.‍