According to Chancellor Jeremy Hunt, Brexit has been a major cause of the woeful performance of the U.K. economy over the last few years. That’s nonsense, writes Matthew Lynn in the Telegraph. The truth is it was lockdown.
The trouble is, on closer examination Hunt’s argument does not make any sense. To start with, our departure from the EU didn’t lead to a hung Parliament. It was Theresa May’s idiotic decision to call an early General Election, followed by a catastrophically inept campaign, that sacrificed the Conservative majority.
And the years of political instability were only caused by a concerted establishment campaign to reverse the result of the referendum. If everyone had accepted the result in 2016, we could have moved swiftly on, and spent our time far more productively figuring out how to make Brexit work.
More importantly, it doesn’t square with the data from across the continent. German GDP over the last quarter after six months of zero growth, and it is forecast to slump into a full-blown recession early in the new year. French growth is slumping back towards zero too. If Brexit is the explanation for our poor performance, then how come the countries that stayed are doing so poorly?
In reality, it was lockdown that crushed the economy. During the pandemic we racked up too much debt, destroyed our work ethic with furlough schemes and home working, and created a backlog in the health service and in other public services that have crippled productive potential.
In its wake, we imposed huge tax rises to try to put the public finances back on track, including deeply damaging corporation tax increases that dented our competitiveness, and undermined the incentive to work with frozen thresholds that have sent tax yields soaring. By trying to blame Brexit all over again Hunt is simply deflecting his own responsibility for our current predicament, and that of his boss, the Prime Minister and former Chancellor Rishi Sunak.