The British political scene is rarely dull, but the last few months have seen so much excitement and turmoil that at times you wondered if it was all part of a Michael Dobbs political novel coming to life. Pundits and commentators were made to look fools, as all their predictions went to dust. We’ve ended up out of the EU, with a new prime minister and an opposition that is hardly worthy of the name. We have a cabinet in which only four cabinet ministers survived in their previously held jobs. We have an economy full of uncertainty about what the effect of Brexit will be and a media scurrying around trying to come to terms with a changed world.
And meanwhile businesses, small and large, just carry on and do what they do. The most remarkable thing about the two months since Brexit is that most businesses have taken it all in their stride. They know they can’t change it, and some wouldn’t want to, so phlegmatism is the order of the day. KBO. ‘Keep buggering on’ as best you can.
It has to be said that ‘Brexageddon’ has shown little sign of coming to pass and the deepest worries expressed by ‘Project Fear’ haven’t remotely happened. Yes, the pound has gone down, but only to its 2013 level. It didn’t plummet. It didn’t collapse. And depending on the kind of business you run, it is not all bad. Exporters are very happy indeed. The FTSE 100 went down, but has bounced back and is now at a 12-month high. The FTSE 250 has also recovered virtually all the ground it lost. British business is nothing if not resilient.
In the short term, nothing changes. Negotiations will probably last until the end of 2018 so we won’t actually leave the EU until the beginning of 2019. By then, International Trade Secretary Liam Fox will have drawn up plans for trade agreements with a whole bunch of countries, hopefully including China, India, Brazil, South Korea, Singapore, Australia, New Zealand, Switzerland and Norway. The two big trade prizes are the EU itself and the USA. Far from being ‘at the back of the queue’, as President Obama famously put it during his own unique contribution to Project Fear, it looks as if the USA is almost giving up on the Transatlantic Trade and Investment Partnership (TTIP) and will be very keen indeed to come to a separate agreement with the UK. However, if the terms reflect those of TTIP we should be very wary indeed.
It has to be said that ‘Brexageddon’ has shown little sign of coming to pass
For David Davis, the Secretary of State for Brexit, the next two years will be very difficult. Known as ‘Monsieur Non’ when he was Europe Minister back in the 1990s, he is nobody’s fool. Remainers keep telling him how important it is that the UK remains in the single market and that free movement of labour continues. He will take the view that the British people voted to leave the EU and we can’t keep one foot in. Border control will take precedence over membership, in any form, of the single market. Yes, we might like to keep some kind of association with the single market, but it will be on our terms, not theirs. Anyone who thinks the UK Government will weaken on this doesn’t know David Davis or Theresa May.
From a business point of view, one thing small and large businesses should know is that there is nothing in the warnings from Labour that employment rights and conditions will be watered down. A senior cabinet minister told me it would be reprehensible to penalise the very people who voted for Brexit. Expect all current EU laws to remain as they are, including employment laws.
Theresa May has spent the last 20 years being patronised by a whole series of mainly male politicians – both on the opposition benches and now her own. Some politicians thrive when they get to hold the top job, others wither. It’s the same in big companies. On the evidence of her first few weeks, Theresa May has stamped her own personality on the government and hit the ground running. She was ruthless in forming her government, caring little for status or reputation. Her only priority was to ensure that whoever she appointed would do the job to the best of their ability and be loyal. Her only error – and it can also be seen as a strength – is to immediately create a whole host of enemies on the backbenches. All prime ministers have enemies, mainly because they can’t keep every single one of their MPs happy. Usually it takes at least four or five years to do this, but she seems to have alienated a lot of former Parliamentary Private Secretaries (PPS) who weren’t promoted in the reshuffle, and she has purged her government of more or less anyone who could be called a ‘Cameroon’.
However, this pales into insignificance when one looks at the travails of the Labour Party. A strong opposition can lead to better government, but a strong opposition is the very antithesis of what we currently have. Labour is in the throes of yet more leadership turmoil and at the time of writing it seems it will be another month before we discover if Jeremy Corbyn is to remain at the helm. My prediction is that he will beat Owen Smith, who until a few weeks ago was virtually unknown outside Wales. But what then? It’s highly unlikely the Parliamentary Labour Party (PLP) will unite around him. Could the PLP split away from the Labour Party itself, or even form a brand new party? We are in uncharted waters.
In addition, there is mounting speculation that Theresa May could call an autumn general election to get her own mandate and to take advantage of Labour’s troubles. It’s easy to see the temptation and there would be little risk for her. However, perhaps the electorate has had enough of voting and the problems presented by the Fixed-term Parliaments Act would be too difficult to overcome. Just as importantly, Theresa May knows it would create yet more instability in the financial markets. For all those reasons, I predict an election is highly unlikely to happen.
Iain Dale presents Drive on LBC Radio, weekdays 4–7pm