Recession…What Recession?

Monday 12th February

The government will be in denial.  The Mad Brexiteers will smell conspiracy and say that the numbers are being fiddled.  But there is little doubt that Britain is doing quite badly; if not heading for a recession in the not too distant future.  It may not all be due to Brexit, but much of it is.  Or to be more precise, the uncertainty surrounding the immediate and, far more important, the longer term, future.

Unbelievably, over half way through the negotiations we really are no clearer about just what sort of a Brexit we will end up with.  Or indeed, even what sort of a transitional period – just over a year away, we will get either.

In December it all seemed so easy, after a bumpy couple of days, and actually months we wasted arguing over minutiae which in the end we pretty well caved in over, we had agreement.  No precise numbers on the Divorce bill, but what we all thought was agreement on both the rights of EU citizens and the transition.  We were told, and as far as I could understand, we actually signed up to, a 21 month ‘implementation’ period when practically nothing would change.  Mrs. May even said that both the Government and Business wanted only one change, presumably in 2021.  That would mean that we stay in the Single Market and the Customs Union during that period – but, as we would have technically left the EU we would no longer have any input into any rule changes.  Seems obvious enough.  But now Rees-Mogg and the other right wingers are saying that this is not acceptable, as we will be a ‘vassal’state.  Incidentally I thought that they always considered us as that anyway, that was why they hated the EU so much.  Now, there is uncertainty, and the embarrassment of Ministers being unable to give any answers at all.

And this is only about the Transition.  There have been no discussions at all, and so far, no agreed Government position on any future trading agreement after that.

December was poor for retailers, as was January too; inflation is really 4.1% if you exclude mortgages which have stayed steady for the last few years.  GDP is running at about 1.5% only half what we had on average year on year from 1945 to 2007.  But this poor performance is set against rising economic growth in Europe and around the world.

Car sales are slipping, and it looks as if even house prices in London and the SouthEast are falling too.  And the longer the uncertainty the worse things will get.  I suspect that no agreement will be reached on trade by the time we actually leave the EU (March 2019), and actually there is no reason why there should be.  Any future trading relationship has nothing to do with the process of Brexit itself.  The Japanese ambassador gave a stark warning that if it became unprofitable to make cars in Britain then they and other manufacturers would leave.  By unprofitable, he meant if tariffs are imposed, if there is no Customs Union, if the free movement of goods is impeded.   And yet, all the signs are that that may well be the Brexit we end up with.

Oh dear….and yet the Brexiteers will not only blame Europe for not giving us what we have asked for, but will also no doubt cry “Recession…what recession?”