Rees-Mogg: “The overwhelming opportunity for Brexit is over the next 50 years.” (interview with Channel 4 News – ‘Jacob Rees-Mogg Says It Could Take 50 Years To Reap The Benefits Of Brexit’).
In the Tacitus Lecture 2017 – ‘The World is Our Oyster? Britain’s Future Trade Relationships’, Sir Simon Fraser argued that the Government had made a political decision to, ‘prioritise other goals over our economic relations with the EU. … This is fine, provided either people are prepared to pay the price in more expensive goods, less inward investment and lower growth, or we can quite rapidly find compensating alternative markets.’
The Peterson Institute for International Economics who analysed how long it took the US to agree 20 bilateral trade deals concluded: (i) one and a half years, on average, and (ii) more than three and a half years to get to the implementation stage. https://www.weforum.org/agenda/2016/07/how-long-do-trade-deals-take-after-brexit/ = 5 years.
In 2016, in my post, ‘The economic dangers of political wishful thinking?’ I pointed out that, ‘In theory 124 trade agreements x 5 years each = 620 years. Hypothetically, all 124 could be negotiated within 5 years (if negotiated in parallel). How many trade negotiators does the UK need to resource this? The EU typically sends 20 commission negotiators to any round of trade talks, backed up by between 25 and 40 technical experts.’ The UK at the time had 40 trade negotiators, compared with the 550-strong trade department in Brussels.
Today the New Statesman featured an article by Will Dunn – ‘Why the housing market is about to crash.’ I commented,
‘Inflation hit 10.1% in July (a 40 year high). It is predicted to reach over 13% in December. If Liz Truss become Prime Minister, cuts taxes and borrows, inflation is likely to rise. If inflation goes up then interest rates may have to be increased. That is likely to impact the mortgage market. As the author of the article states, ‘Everyone considering buying a house will be thinking about this. “This is the most predicted recession ever,” Dorling said. “And as soon as you get hunkering down, and the feeling of ‘wait and don’t buy now’, that’s it. It’s all it takes.” ‘ If Prime Minister Liz Truss (as she has pledged), also passes laws banning members of certain unions from going on strike, there are likely to be a series of general strikes. For inflation, we have already gone back to 1982. Economically are we heading back to 1974 (when Edward Heath was Prime Minister)? While inflation is linked to energy prices, the cost of imports is linked to the cost of doing business, i.e tariffs and administrative costs/logistical delays. The unmentionable ‘Elephant in the room’ is therefore Brexit. What economic impact report has the Government ordered (or Labour demanded) to assess the economic impact of Brexit on the cost of living crisis?’
Therefore, unless ‘people are prepared to pay the price’ or we ‘rapidly find compensating alternative markets’, we will all have to live with the economic impact of Brexit on the cost of living for at least 50 years or more. How can we afford not to recognise the elephant in the room?
We currently have: (i) inflation at a 40 year high (which may rise to 13-15% by January); (ii) a cost of living crisis; (iii) strikes and the risk of general strikes if laws are passed banning members of certain unions from going on strike; (iv) a shortage of NHS staff; (v) a shortage of workers in the hospitality industry (linked to: (a) rising wage demands (b) the cost of living; & (c) inflation); (vi) VAT at 20%; (vii) Corporation Tax set to rise to 25% in 2023 (1st increase in CT in 50 years); (viii) Brexit costs linked to rising inflation – see the links at the end of this post at ‘Carl’s Wealth Planning blog’); (ix) the risk of a property crash if rational buyers decide not to purchase until the rate of inflation has peaked and stabilised, i.e. because if interest rates rise to a point where they cannot make mortgage payments, and their property is sold in a falling market at auction below the original purchase price, they will end up: (a) without a roof over their heads; (b) in negative equity; and (c) with a legal liability to discharge the unpaid balance of the mortgage; & (x) UK general government gross debt in excess of £2,365.4 billion (Quarter 1 – Jan to Mar 2022), equivalent to 99.6% of gross domestic product (GDP).
Therefore, we should also be asking – ‘What impact has Brexit had on inward investment?’
See also my blog on this website (and use the search box at the top to find) ‘What is the European Single Market’ and:
Is Brexit to blame for the UK’s rising inflation? – New Statesman
UK inflation could reach 15% by start of 2023, experts say | Inflation | The Guardian