This week brought more evidence of a trend I and many other Brexit commentators have commented on in recent weeks, i.e. that Brexiters seem increasingly out of touch with and in denial of Brexit reality (see here and here). The starkest example illustrating this assessment this week came from the newly appointed Brexit Opportunities and Government Efficiency Minister (BOGoEMin for short?) Jacob Rees-Mogg who flat out denied that Brexit was having an impact on trade. In an interview with the BBC he stated "I think Brexit has been extremely beneficial for the country. I think the evidence that Brexit has caused trade drops is few and far between."

 That statement stands in stark contradiction with literally any anecdotal account from businesses up and down the country (e.g. event hauliers) and a recent survey by the British Chamber of Commerce, which found that 71% of exporters say the Trade and Cooperation Agreement (TCA) with the EU “is not enabling them to grow or increase sales” and a “[m]ajority think it has pushed up costs, increased paperwork and delays, and put the UK at a competitive disadvantage.” Our BOGoMin’s statement also contradicts the House of Commons Public Accounts Committee’s report and official statistical data on trade figures that I reported on last week and is belied by the government itself who has set up a scheme to help SME with the Brexit impact on trade.

Just to briefly summarise reality, the official statistics on UK trade show increased costs due to additional red tape and a 12% decline of exports to the EU and a 20% decline of imports for 2021 compared to pre-pandemic levels. This compares with an export boom between Northern Ireland – which is still part of the EU Single Market – and the Republic of Ireland, with exports from NI to the RoI up 65% and imports up 54% on 2020. (The Irish figures are not directly comparable to the ONS ones for the UK, which are comparing 2021 to 2018 not 2020, but the direction of changes are telling and the point that Brexit is an opportunity for trade between RoI and NI trade holds more broadly).  

Jacob Rees-Mogg living in a different reality is of course nothing new. What is new, however, is the effect that his denial of reality is having on me. While a few months ago his dishonest and blatantly false statements would have outraged me, I am now almost pleased to see him deny reality in this way. The reason for that is that – like I argued last week – Brexit lies before Brexit and Brexit lies now have very different effects on British politics and our lives.

Before the referendum and during the withdrawal and trade deal negotiations, the lies and denial of reality were a powerful weapon to garner popular support for a greatly damaging project. The lies also led to one of the worst possible outcomes in terms of the post-Brexit arrangements, namely a hard Brexit (only ‘no deal’ would have been worse). Each lie was therefore dangerous and leading the country down a blind alley.

Now, however, the situation is different. Increasingly, Brexiter lies are not judged against what more honest actors predict to be the risks and opportunities associated with exiting the EU, but rather they can be judged against reality. The confrontation of the lies with reality can only have one outcome, i.e. show an increasing discrepancy between what was promised and what is happening in reality – and that constitutes a chance to drag the UK out of the populist swamp in which it has become engulfed.

To be sure, there will still be a sizable number of people who are willing to believe the lies about how ‘taking back control’ was worth every bit of economic damage we’ve done to the country. But that number is bound to shrink as people are waiting for the country to be levelled up and power given back to the people and while doing so are struggling to pay their energy bills.

Brexiters’ know that. There is increasing evidence that they are now trying to play for time by increasingly promising Brexit benefits that take time to materialise. In Rees-Mogg’s first interview as BOGoEMin, he promised that “big wins” were “coming shortly” and suggested it would take a full decade until people will recognise that Brexit is preferable to re-joining. Indeed, in a chilling quote in the Express Rees-Mogg warns that within a decade “[i]t will be impossible to go back because our economy will be so transformed that firstly nobody would want to and secondly the EU would look at us in horror because we would not be following all their petty rules.” This reads like a threat to make the Singapore-on-Thames menace of deregulating environmental, public health, safety and other standards a reality.

The quote also directly contradicts other statements the BOGoEMin has made this week when voicing his support for an Institute for Economic Affairs (IEA) report, which advocates the exact opposite. Namely, that the UK should adopt a ‘unilateral openness’ approach, recognising EU regulation even if the EU refused reciprocity. Reciprocity is of course a key demand for Brexiters like David Frost and indeed a matter of national pride (because in the Brexiter mindset it would signal that the UK is worth 27 other European countries). Therefore, the government following IEA’s – questionable (see below), but realistic – stance on unilateral trade liberalisation would genuinely constitute a paradigm shift in post-Brexit UK-EU relationships. The shift would mean a triumph of the libertarian, free-trade wing of Brexit over the parochial, autarkic nationalist wing, as Chris Grey suggested this week.

Yet, even within the libertarian wing it would imply a fundamental transformation away from the illusionary ‘bonfire of regulation’ approach, towards one that accepts that free trade requires common rules and standards and that freer markets necessarily mean more rules (because large scale markets are not spontaneous, natural orders, but sophisticated, state-made institutional systems). So, instead of seeking to diverge from EU regulations for the sake of it, the strategy would shift to aligning unilaterally where it is required to guarantee market access. Such a strategy of unilateral trade liberalisation is not without risk, as I argued a few weeks ago. Still, it would imply that the dangerously naïve view on deregulation that dominates large parts of the Brexit movement is off the table and a much closer relationship with the EU may become possible. This might pave the way to a softer Brexit, which – as I argued elsewhere – is currently the best option to take the UK out of the cul-de-sac in which it finds itself.

Our BOGoEMin’s contradictory statements about transforming the UK’s regulatory environment to the extent that the EU will be horrified and his support for the IEA’s suggestion the UK should continue to unilaterally align its regulations hints at a contradiction that splits not only Rees-Mogg’s personality, but increasingly the entire Brexit movement.

Brexiters divided

As reality kicks in, the fault lines in the heterogenous Brexit movement start to become ever wider. I have blogged before about the ‘revolt of the deregulators’ who are increasingly unhappy with the absence or lack of radicalism of Johnson’s regulatory reforms. This faction of the Brexiter camp advocates for a radical divergence from EU rules either for the sake of it (i.e. to show that we have indeed ‘taken back control’ even if that control is pretty useless in practical terms), or based on a simplistic, libertarian understanding of markets that consists in believing that fewer rules mean more economic freedoms. Either way, their preference for a Singapore-on-Thames type Brexit is based on lofty ideas of sovereignty and ill-conceived liberty. Their unhappiness with actually existing Brexit increases by the day. Indeed, even the incoherent childish tantrums of die-hard ‘team Boris’ Telegraph columnists now end with the conclusion that “No10 simply hasn't got Brexit done well enough.”

This group of Brexiters’ preferences are in line with the kleptocrats and aristocrats in the Tory party who simply seek to weaken state capacity and oversight over the economy to be better able to enrich themselves – as they did during the pandemic. This faction dreams of going back to a pre-1970s situation dominated by what the late Michael Moran called Victorian-age ‘club government’ where few rules existed for those in power and things were done based on informal gentlemen’s agreements within a closed ‘old boys club.’ Rees-Mogg’s recent suggestion to cut 65,000 posts in the civil service is in line with that faction’s – of which he is the chief exponent – preferences. Such a situation would mean less accountability to the general public and hence much freedom for the rich and powerful, very little for everyone else.

The “lofties,” kleptocrats, and aristocrats’ preferences are increasingly opposed by the more state interventionist, populist, and nationalist Brexiter faction that attacks the government for its aristocratic shenanigans – such as party-gate. Among this faction are the 2019 cohort of conservative PMs from the Red Wall constituencies, with Christian Wakeford arguably the most extreme example. Their preferences for Brexit are the opposite of what the lofties want, namely to show people in the Red Wall seats – who according to some accounts are losing faith in Johnson due mainly to the Partygate scandal – that the Conservative party is serious about levelling up and has really become the party of the ‘ordinary man.’

The fourth – least vocal – faction are the ‘realists’ who are serious about Brexit and therefore point towards the details that matter to make Brexit a success. Their voice is currently still drowned out by three-word-slogan shouting members of the first three factions, but as reality starts to bit, their voice is bound to gain more weight.

This week, Telegraph columnist Ben Wright – who come close to that category of reasonable Brexiters (although I do not know which way he voted) – wrote a mock letter to our BOGEM warning about mindless attempts to deregulate financial services in search of Brexit opportunities. The gist of the article is this: 1. Even during EU membership the UK financial regulators could and did deviate from other EU countries. 2. Often times the UK raced other EU member states to the top rather than to the bottom, i.e. UK financial regulators interpreted generic EU rules more strictly than other EU countries’ financial regulators. The reason for this prudential ‘gold-plating’ approach was simply that the UK’s financial sector is much larger than other countries, posing thus greater systemic risks. 3. Financial regulations are “drawn up at a global level these days,” which means the UK will most likely be better off following them than creating its own ideosyncratic ones. Wright’s more general point though is that any Brexit dividends expected from deregulation will require careful analysis of the regulatory details of each industry.

(Also important to note, while Rees-Mogg is searching for things to deregulate, the EU pursues its drive towards ‘strategic autonomy’ of its capital markets. Last week, the EU announced that UK clearing houses’ permission to serving customers in the bloc would be extended one last time until June 2025. After that date, the recognition of equivalence accorded to the UK in this area will lapse. The UK are not the only ones who are taking back control.)

The increasing divergence of the preferences of ‘lofties,’ populists, and ‘realos’ is a result of the increasing gulf between Brexit promises and reality. Reality makes it increasingly difficult for Brexiters to provide any convincing justification for the project. A good example comes from the largely fact-free, poorly informed, falsehoods-based, and cliché-strewn rambling on GB News, which does not get more convincing by the mounting evidence on Brexit reality. You know desperation is in the air when Mark Dolan is forced to admit that “[s]ome of the detail in relation to Brexit doesn't make for great reading.”  In this context, the case that it is the EU rather than Brexiters who are “unapologetically detached from the hopes, dreams and aspirations of the people [they] lead” is becoming increasingly hard to make in face of reality. For instance fearing the Schengen agreement because of the alleged “unlimited flow of citizens back and forth, with its potential stresses on infrastructure and society” sounds like a bad joke not only because it confuses Schengen with Free Movement of People (which we had without being member of Schengen area) and given the stress the new border regime the UK government has put in place is causing lorry drivers and travellers.

Starmer’s two-pronged strategy

This week also saw another backlash against labour leader Kier Starmer who very boldly stated that there was no case for re-joining the EU. Following that statement, the Labour leader had to take a lot of flak on social media for his statement. Many Remainers seem to see it as a betrayal and making comments to the effect that Starmer has made his biggest mistake yet.

I think the anger at Starmer is misguided for at least two reasons: Firstly, even if the Labour leader wanted to re-join the EU, doing so during his Premiership is unrealistic for many reasons, not least because it is unclear if the EU would want to engage in a membership negotiation process at the current stage. Secondly, Labour campaigning on a strict ‘no case for re-joining’ position puts the conservatives in a very difficult position. Indeed, Labour ruling out re-joining has the great advantage of taking the toxic “in/out” debate out of the next GE campaign. The Conservatives will not be able to brand Labour as the ‘Breamoner’ party, but instead will have to defend what they have actually achieved. Rather than campaigning on keeping “those obsessed with reversing Brexit” out of government, they will have to justify their own record and explain their plan. Convincing the voters that all the lovely sovereignty we got back was worth the economic pain, or that the best of Brexit is still to come – in 10 to 50 years – may be a promising strategy if the opposition promises instead to undo what Brexit may still deliver in the future. But when the opposition is promising to make Brexit better more quickly rather than reversing it, the party in government will be in the defensive; having to defend its plan against an alternative plan. Labour, on the other hand will be able to unpick everything that has gone wrong with Brexit since January 2021 – and there is a lot to get one’s teeth in in that respect. The conservatives will certainly not hesitate the build more castles in the sky, but Labour will simply be able to ask why the existing ones are crumbling.

No doubt, Starmer’s clear stance will put off some labour voting Remainers, but realistically who will they vote for given that the two major parties are now ‘pro-Brexit’ as some put it (I personally disagree that saying ‘re-joining is not an option’ means being pro-Brexit) and given Remainers strong aversion against Johnson? Labour may lose some staunch remain voters who may defect to the Lib Dems or perhaps the Green Party, but they will certainly not turn to Conservatives who not only are equally ‘pro-Brexit,’ but are pro a much worse type of Brexit from a progressive viewpoint.

More importantly, with Labour still obsessed with winning back the Red Wall seats from the Conservatives, being clear on Brexit is much more important than promising a politically and practically unrealistic re-join policy at this stage. I am personally sceptical of the obsession with rewinning the Red Wall seats at any cost, while neglecting the 48% of voters who voted to remain. However, given that Johnson’s popularity has plummeted in the Red Wall seats following Partygate these areas may become more realistic targets for Labour again. Moreover, the strategy of trying to regain votes in these leave voting areas by simply not promising to re-join and holding the conservatives to account for their predictable failure to take levelling up seriously makes that strategy much more promising than Labour’s illusionary initial strategy of trying to outcompete Johnson on nationalism, immigration, and ‘war on woke.’

Another significant development this week was that it emerged that Starmer seems to combine his ‘no case for rejoining’ strategy with an informal ‘non-aggression pact’ with the Liberal Democrats. If Labour and Lib Dems concentrate their resources in constituencies where they each are most likely to displace a sitting Tory MP, Labour taking the ‘in/out’ question out of the equation makes even more sense. If Labour manage to regain some seats in the Red Wall – for which not being stamped as the ‘Bremoaner’ party is key –, while the Liberal Democrats campaign on a softer Brexit – leaving the possibility of re-joining the EU in the future open – while benefitting from conservative ‘Blue Wall’ voters’ discontent with Johnson’s Brexit, Partygate, and focus on Red Wall voters, the Tories will come under pressure on two fronts. With a re-run of the ‘get Brexit done’ election of 2019 out of the question thanks to Starmer’s strategy, it seems very difficult to imagine a policy programme or narrative that will allow the Tories to hold together the heterogenous coalition that handed them the 2019 landslide victory. The combination of losses to labour in the Red Wall and losses to Lib Dems in the Blue Wall seems the only way to overturn the massive Conservative majority from the last election.

Time – or rather the next GE – will tell whether being clear on Brexit was Starmer’s smartest move or his biggest mistake. What is clear, however, is that removing the Conservatives from government is a much more realistic step towards setting the process in motion that sees the UK slowly gravitating closer to the massive economic bloc on its doorstep, than campaigning on ‘re-join the EU.’

Labour supporters may not like either Starmer dropping re-joining or an informal non-aggression pact with the Lib Dems. Yet, with the benefits of hindsight, Gordon Brown’s refusal to consider a coalition or a “confidence and supply” deal with the Lib Dems after the 2010 GE, is what brought us nearly a decade and a half of conservative government – including a decade of austerity, disastrous NHS and University reforms, and of course Brexit. For Starmer’s strategy to be a bigger mistake than that, it would have to be a mistake of epic proportions.

Getting ready for post-Populism

To some extent Johnson’s recent troubles and Brexiters’ increasing difficultly to face reality illustrates a more general phenomenon common among populists: They are generally not very good at delivering what they promise during elections…and eventually people will realise. That goes not just for Johnson and other fake populists in UK politics, but for populists around the world.

Media attention is firmly on anti-lockdown and anti-vaccine protesters (e.g. in Ottawa), which may give the impression that populist Covid strategies (anti-lockdown, anti-mask, and in many cases – although not Johnson’s – anti-vaccine) are popular. Yet, the silent majority of people start to realise that populists do not deliver in terms of public health. There is indeed evidence that the Covid19 pandemic may undermine support for populists. The Centre for the Future of Democracy at Cambridge University’s ‘The Great Reset’ report on the impact of the pandemic on support for populist governments around the world shows that popular support for populists is declining due to their handling of the pandemic. Another study confirms this, finding that in 2020 countries under populist leadership had double the excess death rates than non-populist countries. Viruses, it would seem, are not fooled by three-word slogans.

There is also mounting evidence that populists do not deliver in terms of economic policies either. One long-term study finds that 15 years of populist leadership leads to a 10% lower GDP compared to a realistic non-populist alternative scenario. The reason for the poor economic performance being “economic nationalism and protectionism, unsustainable macroeconomic policies, and institutional decay.”

As a result of these trends, Victor Orbán – arguably one of Europe’s most successful populists – is facing his thoughts re-election yet. Of course, with the Media largely under his control and the electoral laws strongly tilted in favour of his ruling party, there is still a good chance of him winning another mandate. But popular support is crumbling.

It seems increasingly likely that Johnson will face a similar challenge in the next GE. Despite the success of the vaccine roll out, the fact is that the UK has the world’s seventh highest death toll and the highest in Europe (by 19 February 2022 160,379 people have died of the virus in the UK) – and regular readers of this blog will know all about the impact of Johnson’s populism on the British economy. Yet, just like Orbán in Hungary, Johnson and his populists have a firm grip on much of the domestic media and an electoral system that favours them (making it possible to win an incontestable majority in Parliament while representing only 40% of voters). Still, populists in power are always like a straw fire, which can burn for a long time, but eventually will consume itself due to the lies and contradictions on which it is based. As the castles in the air and the pies in the skies are crumbling, it is time to start preparing for the UK’s post-populist future.