Strange times

Professor Chris Grey’s latest analysis: a big picture overview of how the Queen’s death coincides with the ever clearer failure of Brexit as a national strategy and the start of one of the most peculiar governments we have ever had.

What a fortnight to have been on holiday from blogging! That Liz Truss would become Prime Minister was, of course, expected; that the Queen would die two days later was not. One consequence of this conjuncture was to virtually suspend normal politics until last week thus muffling Truss’s early decisions. But perhaps we will not see a return to normal. It’s possible that the end of the Queen’s long reign will provoke new questioning of our politics. And, with more certainty, there’s a good case that Truss’s government is going to be unlike any we have seen before.

Flickr/Scottish Government

Death of a Queen

The Queen’s death was plainly a major historical event, but it might prove to be more than an event by triggering a process of national reflection. Two years ago, I wrote an article in Byline Times anticipating that her death could have such an effect, initiating or intensifying a conversation about Britain’s modern history and contemporary place in the world. There are already signs of it, interesting examples including Lewis Goodall’s reflections on ‘The Queue’ and a debate between the twice Orwell Prize-longlisted journalist Nesrine Malik and leading historian Professor David Edgerton, though if it becomes widespread it won’t happen simply by formalised discussion so much as by a gradual seepage into public discourse.

It will entail much more than Brexit but it would encompass Brexit, if only because the Queen’s death ends one of the last direct links to the Second World War, which looms so large in the historical reference points for Brexit. But that is only a symptom of the more general way that, without many people really recognizing it at the time, the 2016 referendum was a kind of unacknowledged conversation about, precisely, Britain’s modern history and contemporary place in the world. It wasn’t explicitly couched in those terms, or if so then rarely, perhaps because both sides expected ‘remain’ to win. Nevertheless, both as an economic proposition about trading relationships and a political proposition about national sovereignty – and about how those things related to the fifty years of EU membership – this is what was at stake.

So, unwittingly, we had a national conversation but botched it by not knowing that’s what it was and not understanding what we were talking about. Largely as a result of that botch, the actual consequences of Brexit are still only gradually being uncovered. Yet, already, the blithe assumptions about the ‘sunny uplands’ that awaited Britain have been brutally exposed as false. Just last week, Truss has publicly acknowledged that one of the key ‘prizes’ (though in fact always of very limited value) of Brexit, a UK-US trade deal, is not even remotely in prospect. Though almost casually made, it is in itself a huge admission of failure, whilst exemplifying the wider failure of all the Brexiters’ promises.

The failure of Brexit

For to everyone apart from the diehards, who are so invested in Brexit that nothing would persuade them otherwise, it is now plain that Brexit has been, and will continue to be, hugely damaging to the UK. It simply isn’t viable as a strategy within a world of regional economic and trade blocs, and of transnational regulatory systems, and no amount of ‘Global Britain’ blather can make it so. Relatedly, the idea of a post-Brexit geopolitical ‘pivot’ to the Indo-Pacific, always a fantasy, has been shredded by the Ukraine War. Whether at the level of political alliances or of energy co-dependence, as well as at the levels of trade and regulation, the UK’s divorce from the EU has been exposed as folly. Hence only 27% of the population now think that leaving the EU has had a positive effect on the country (48% negative, 18% no difference, 8% don’t know), and although, despite that, 38% still think that leaving was the right thing to do (51% wrong, 11% don’t know) this has now been consistently the minority view throughout almost the entire post-referendum period.

In the process of enacting Brexit, the UK – in an almost literal sense, since the Brexiter fantasy involves a denial of geographical reality – has been misplaced in the world, and therefore the UK’s place in the world – in a metaphorical, geo-political sense – has been mislaid. Moreover, the very existence of a United Kingdom of Great Britain and Northern Ireland has been put under new strains. That is in no small part due to having treated the referendum result as binding on those parts of the Union that didn’t vote for it. And that in turn is an aspect of Brexit being pursued in the hardest of forms when, in any form, it only briefly had the narrowest margin of support even treating the whole of the UK as a single entity.

Imagine that Brexit was a success

So, in summary, whilst the Queen’s death, marking a fracture in, effectively, the entire post-war history of the nation, would always have had the possibility of opening profound questions about modern Britain, that possibility has been given a particular salience by Brexit. For her death has coincided with the pursuit of a new national strategy which is manifestly failing and which is clearly and consistently lacking majority support (and, as an interesting aside, it seems to have been inadvertently revealed this week that, contrary to reports at the time, the Queen was not in favour of Brexit).

Indeed, it’s highly revealing to consider just how different things would be if Brexit had been anything approaching the success its advocates promised. In those circumstances, the national mood (if there is really such a thing) would undoubtedly still be reflective about Queen Elizabeth’s death, but at the same time confident and united in being at the start of the exciting new journey of national renewal which Brexit was already beginning to deliver. Perhaps it would even be quietly muttered that, noble as the Queen had been, she had reigned over a nation that had given in to precisely the ‘declinism’ to which Brexit was the solution. Time, indeed, for a change to a new Carolean era of prosperity and optimism.

Instead, this huge symbolic rupture with the past has overlapped with a profound disquiet about the present and the future because of Brexit. With this occurring at a time of severe and growing economic crisis, the possibility of serious national self-reflection becomes even more likely, although where it would lead is impossible to predict and not by any means assured to be either benign or unifying.

PM Liz Truss. | Flickr/Number 10

Enter Truss

The arrival of a new Prime Minister is not an unfortunate addition to this moment of historic instability. It is, as I wrote in a blog post, the latest episode in the political instability wrought by Brexit. It also marks a distinctive moment, in that it is the first time since the referendum that the free-market, deregulatory, libertarian right strand of Brexiters has been unequivocally in control of government, with advisors drawn from its numerous think tanks.

Of course, that strand was important before and, in conjunction with the purely nationalist and anti-immigration strands, was hugely significant in pushing for Brexit in the first place and, subsequently, for insisting it meant hard Brexit. Even so, neither Theresa May nor even Boris Johnson was ever of their number, and Johnson’s 2019 majority, which Truss inherits, was predicated on the same shape-shifting about the meaning of Brexit that the Vote Leave campaign had used to secure the vote in 2016. It’s easy to forget now, but that Vote Leave team, headed by Dominic Cummings, which was also the power behind the throne for most of Johnson’s premiership, was deeply contemptuous of the ERG and most of the Brexit Ultra MPs who are now in the ascendant.

There is no doubt that they see this as their first and perhaps last chance to get ‘true Brexit’, even though what they mean by that was never put to the electorate, either in 2016 or in 2019. No longer do they think it so crucial, as they once insisted when promoting Brexit, that the people choose their rulers. That means not only that the government has little democratic legitimacy but also that it will face significant constraints on implementing its agenda. The internal contradictions of the diverse voting coalition Johnson and Cummings created have not changed, whilst Truss’s popularity amongst Tory MPs is much more limited than Johnson’s in 2019 (or May’s, in the heady days preceding the 2017 election).

Moreover, whilst some people get understandably exercised by the role of ‘Tufton Street’ think tanks, it’s worth recalling that Johnson’s government, probably no less than Truss’s, was heavily linked to such bodies. But governments are constrained in ways that think tanks aren’t, and even the most ardently ideological libertarian SpAD quickly finds that political reality is very different to the world of position papers and whiteboards. For example, as Martin Wolf of the FT points out, it is hardly compatible with the Hayekian doctrine for the government to be setting a national economic growth target.

Constrained Truss

More generally, the economic circumstances of the energy crisis, inflation, public service and especially NHS crises, flagging investment, and a currency in real danger of imploding – much of which has been made worse by Brexit, and all of which comes like punches on the numerous purple bruises causd by Brexit – are more severe than any British Prime Minister has faced for decades, and will place significant limits on Truss’s freedom of action. The most obvious consequence of this is that, “libertarian revolutionary” as she may be, Truss is about to preside over a huge expansion of government spending and debt to subsidise energy bills because of the unavoidable exigencies of the moment and in direct contradiction to the position she held against ‘handouts’ only a few weeks ago.

To the extent it has any coherence at all, ‘Trussonomics’ will repeatedly run up against these political constraints. Its guiding theme of ‘trickle-down’ economics, the discredited theory which informs tax cuts and the decision to lift the cap on bankers’ bonuses, is completely at odds with the politics of a country facing a profound cost-of-living crisis. Strangely, the chosen leitmotif of a relentless focus on GDP growth ignores one of the populist lessons of the Brexit campaign – ‘that’s your GDP!’ – which informed the now abandoned rhetoric of the ‘levelling up agenda’.

Nor is the plan to review the restriction on working hours inherited from the EU Working Time Directive, for all that it is a longstanding cause celebre for Brexiters, one with obvious populist appeal (note, too, that it is only a ‘review’: like so many deregulatory reviews initiated since Brexit it may well come to nothing once the practical realities emerge). Indeed, as many have remarked, Truss’s early moves could hardly have given so many political hostages to the Labour Party. To that should be added the point that nor could they more clearly have fractured the already fragile coalition of support for Brexit.

Brexity Truss

In other ways, though, Truss’s approach is resolutely ‘Brexity’ and, whatever she may have thought in 2016, she must now be counted amongst the hardest of Brexiters. Apart from anything else, it is no coincidence that her economic guru is Patrick Minford, for decades an extreme and minority economic voice on Brexit and much else besides. It’s almost incredible that this Thatcherite fossil, already a schoolboy when Queen Elizabeth began her long reign, is now heavily influencing government economic policy. One thing which comes with Minford’s contrarian resentments is the familiar Brexiter hostility to the ‘economic Establishment’ and the civil service, of which the immediate decision to fire Sir Tom Scholar, Permanent Secretary to the Treasury, was emblematic.

This attracted much criticism as an unfair and foolish treatment of the civil service, but also reflects a deeper and even more dangerous thread in Brexit, which is to treat expert consensus as an ideological conspiracy against Brexiter truth. This is difficult ground, since it would plainly be wrong to assert that expert consensus is necessarily right, or is the repository of some non-ideological truth, and, for that matter, critique of the ‘Treasury view’ as a small-c conservative constraint on government ambitions isn’t confined to Brexiters. But whilst it is always possible that the consensus view in economics may be wrong, of all the forecasts of Brexit’s economic effects by far the most inaccurate was that of Minford’s Economists for Brexit group.

However, predictive track record is not what is at issue here. Ever since 2016, the repeated attacks on not just the Treasury, but the Bank of England (and especially its former Governor Mark Carney), or any individual or institution that even questions Brexiters’ claims, go well beyond the parameters of normal political and economic debate into something resembling religious sectarianism. Again, though, Truss doesn’t operate without any constraints, even in these very early days, and the backlash against Scholar’s sacking seems already to have forced her to hold back from doing the same to Sir Simon Case, the Cabinet Secretary.

Cakeist Truss

Truss also displays some of the ‘cakeism’ which did so much to transform Brexit from a political prospectus with which one might agree or disagree to a wholly dishonest project in which reality is denied in favour of quasi-religious faith. In particular, it can be seen in the ramping up of public debt to cover energy bills as well as massive tax cuts. As with the cakeism of Brexit, the issue isn’t the merits of the policy as such, which can be debated, it’s the refusal to accept that the policy comes with any costs or trade-offs. It’s as if the campaigning tactic of dismissing all Brexit costs as ‘Project Fear’ has morphed into a governmental principle that rejects any notion of risk in relation to any policy at all.

That seems especially bizarre in this case, when it has been an article of faith for the Thatcherite Right that ‘the books must balance’. There’s much to debate about that proposition, too, a debate in which context matters more than framing some general rule. In the current context, not least because of the damage Brexit has already done to sterling since the referendum, the principal risk is a full-scale run on the pound, which has already been foreshadowed in the currency markets since Truss took office on her tax-cutting platform.

It’s a risk that can only be enhanced if, as reported, the government is not going to issue an economic forecast with last week’s major economic statement, as the suspicion can only be that it is dire. It’s pointless anyway as others can do the sums, and the Institute for Fiscal Studies has already warned that the government’s debt plans are “unsustainable”, highlighting the particular impact of the scale of the anticipated tax cuts but also reflecting the government’s refusal to fund the energy support package through tax-raising measures.

PM Liz Truss. | Flickr/Number 10

Delusional Truss

This matters because even if Truss and Kwasi Kwarteng were completely right to pour scorn on the Treasury’s view of the world that doesn’t affect the fact that currency traders hold very similar views, and act on them, and they can’t be sacked or ignored. As with Brexit dogma in general, reality can be denied and domestic critics derided as fearmongers or bullied into silence, but when that dogma meets the external world, whether that be currency markets or the negotiating power of the EU, reality always wins. Truss may put her faith in Patrick Minford but, to put it brutally and crudely, currency traders don’t give the tiniest f*** about Minford or his theories, and nor do investors or any other economic actor. Thus market analysts now say there’s a 25% chance that we will soon see pound-dollar parity for the first time ever.

The other big danger, given ballooning government debt, is that, as Mark Carney long ago warned, ‘the kindness of strangers’ could come to a ‘sudden stop’, with international investors refusing to go on funding government borrowing. For, of course, it is not ‘kindness’ that is at issue, but a cold-eyed assessment of risks and rewards. Although few commented on it at the time, I pointed out last April (see footnote) that the current account deficit was becoming alarmingly high and the forecasts were for it to get worse. Now (although we can’t be certain of the figures yet) it is set to increase dramatically.

In fact, as Paul Mason wrote this week “all six dials on the dashboard of the UK economy: inflation, investment, trade, debt, sterling and the current account [are] flashing red”. For Truss, to proclaim, as she did last week, that her “belief is that Britain’s economic fundamentals are strong” shows precisely the Brexiter logic that ‘belief’ equates with truth. Indeed it’s only last month that she was boosterishly proclaiming that recession was “not inevitable”, despite Bank of England forecasts: as interest rates rose to their highest level since 2008, it became clear that even as she spoke the economy was already in recession.

Northern Irish uncertainties

That reality trumps faith and fantasy still isn’t a lesson that Brexiters seem able to learn, though. Nowhere is that more so than in relation to the still ongoing Northern Ireland Protocol debacle. There’s certainly a possibility of a ‘re-set’ now, especially since, as the government accepts there will be no trade deal with the US, the only barely credible reason for refusing SPS alignment has disappeared. And any half-way sensible government faced with as many serious problems as this one would certainly not add to them with the entirely self-imposed one of reneging on the Protocol. Doing so is not just profoundly damaging the UK’s international reputation and relations, it is also exacerbating the energy crisis and prolonging the damaging exclusion of the UK from EU science programmes as well as, down the line, risking the provocation of a trade war with the EU and a rupture with the US.

But, then, a half-way sensible government wouldn’t have appointed ERG Brexiter hardliners Chris Heaton-Harris and Steve ‘hard man’ Baker as, respectively, Northern Ireland Secretary and Minister, suggesting an intention for confrontation. Against that, Heaton-Harris has been making conciliatory statements, explicitly suggesting he shouldn’t be judged on his Brexiter background. In the last few hours, there have also been signs of a more moderate approach from the government, with the threat of unilateral derogation from the Protocol apparently lifted.

If so, that’s welcome, though note that it would be a second early U-turn from Truss on her campaign promises. It’s too early to judge yet, and we’ve been round these loops of conciliation and aggression so many times, but if a deal is really going to be done expect at least rumblings of rebellion from the Ultras that, yet again, Brexit is being ‘betrayed’. Baker, in particular, who gave such strong support to Truss’s leadership bid might be expected to make that charge. The same old Brexit rows that May and Johnson faced lie in wait for Truss. Much more on all this in the coming days and weeks, no doubt.

A very peculiar government

As I write this analysis, and having read those of many others, it strikes me that it is almost impossible to articulate a coherent account of Truss’s government because it is one of the strangest this country has had. It does not even seem to know how to describe itself. It blends aspects of the economics that led to the 1976 IMF bailout – for context, just as the Queen was about to celebrate the mere Silver Jubilee of her reign – with aspects of the Thatcherism that subsequently grew out of that crisis. But whereas Thatcherites had the bedrock of realism to know that ‘you can’t buck the market’, Truss’s Brexiter Thatcherites think that true faith can trump reality.

The government’s avowed priority is economic growth, but it has an undiscussable commitment to hard Brexit, which is the most permanent drag on growth and which itself results in large part from a rejection of the Thatcher-inspired single market. It appears totally uninterested in the horrific impact of Brexit on small exporting firms, which were not only iconic for Thatcher but which are central to economic growth. In fact, it isn’t notably pro-business of any size – even banks aren’t hugely exercised about being able to pay bonuses – so much as in thrall to a ‘Janet and John’ ideological theory about capitalism that has no relationship to actual business needs and priorities.

It is a post-Brexit government, with Brexiters in every key position, but very little of its policy agenda seems to require Brexit. That is certainly true of the core tax-cutting policies, and also of the reported plans for new ‘investment zones’ with lower taxes and planning deregulation (these are different to Freeports but, as with Freeports, are nothing remotely like ‘Charter Cities’, despite the latest swell of social media excitement). Perhaps tellingly, the post of Minister for Brexit Opportunities has been axed, a tacit acknowledgment not just of its failure but of it being doomed to fail. As for the ‘Brexit Freedoms Bill’, wait for the arbitrary dates for dropping EU regulation to approach, and we’ll see what happens (much more on this in future pieces, no doubt).

It is a government that presents itself as having a seriousness of purpose that Johnson’s administration lacked, but inherits his cakeism and vapid boosterism; as having a can-do pragmatism whilst asserting a populist preference for faith over evidence and expertise. It is small statist, whilst expanding the size of the state and rejecting ‘austerity’. It is deregulatory but largely coy about saying much about what this means in practice or how it would relate to the central task of creating growth. It acts as if it were a new government and has presented an entirely different manifesto to that of 2019, but it is reliant upon the voting coalition it inherited from 2019 (with consequences already emerging over Truss’s change in fracking policy) and has at best only a couple of years left of this parliament. It is an ideological government but without coherent ideology, and led by a dogmatist who is also an opportunist.

Perhaps more than anything else, and more dangerous than anything else, it seems like a government composed of chancers and mediocrities who are at the same time arrogantly certain of their beliefs. By an accident of circumstances, which in large part include Brexit, they have got hold of a power they have neither the competence nor the wisdom to be entrusted with, but to which they feel an unquestioning entitlement. This is the consequence of the winnowing out of any moderate or even halfway pragmatic figures in the Tory Party since the Brexit vote, to the extent that even someone like Rishi Sunak is now denounced as a ‘socialist’ and Brexit ‘compromiser’. About the best that can be said for this government is that, despite earlier rumours, it seems it will not contain Iain Duncan Smith, John Redwood or David Frost, so, apparently, there are at least some depths to which it will not yet sink.

The bleak reality

Even if the strange coincidence of this new Prime Minister arriving just as the old Queen departs doesn’t lead to extensive national self-reflection, it does present an opportunity for the government. As Lord Ricketts, the former senior civil servant, wrote last week, the swell of international attention and goodwill occasioned by the Queen’s funeral could be a chance to repair the damage that Brexit has brought to international relations. So, too, might the moment of considerable national unity it brought be built on to assuage the divisions of Brexit.

But what seems far more likely is that the world sees a country that for all its faultless pageantry, its sombre and dignified mourning, has lost its way and is now further destabilised by losing one of its deepest anchors. Adrift since Brexit, it is now governed by a motley crew of over-promoted ideologues like Suella Braverman and self-important pinheads like Jacob Rees-Mogg, led by a peculiar and delusional Prime Minister. As the grandeur and collective emotions of the last couple of weeks fade, we are left with the bleak reality of a government not just incapable of resolving the dislocations – economic, geo-political, cultural, reputational – of Brexit and all that has followed, but incapable of recognizing their existence or even of caring were they to do so.

GOING FURTHER:

— AUTHOR —

▫ Professor Chris Grey, Emeritus Professor of Organization Studies at Royal Holloway, University of London, and previously a professor at Cambridge University and Warwick University.

Sources

• Text: This piece was originally published in Brexit & Beyond and re-published in PMP Magazine on 28 September 2022, with the author’s consent. | The author writes in a personal capacity.
• Cover: Flickr/Number 10. - PM Liz Truss. | 6 September 2022. (Licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.)