ourEconomy

Brexit: a red, white and blue race to the bottom

The only people that are taking back control from Brexit are the same vested interests that fuelled voter discontent in the first place.

Miriam Brett
15 March 2019
John Stillwell/Press Association. All rights reserved.

Times of crises are all too often capitalised on by the right as an opportunity to bulldoze through an agenda of privatisation, deregulation and austerity, with corrosive implications for our economy and social fabric. Far from taking back control, the Tories’ Brexit dream is one in which Britain leads a race to the bottom, and the wheels are already in motion.

Amid the panic of a crisis, austerity is depicted as an apolitical necessity. Privatisation is sold as an efficient fix to cumbersome state ownership, while deregulation is accelerated and corporate taxes are slashed under the ‘sensible’, ‘pragmatic’ guise of capturing investment. The desired result is a dramatic reimagining of society, and the deepening of financialisation.

The UK turbo-charged this project after the last financial crash: the public ploughed £137 billion into the banks, publicly owned assets like Royal Mail and the Green Investment Bank were privatised, and tax cuts were handed to the rich as the rest were given austerity.

A decade later, the promised land of economic recovery has not materialised. Instead, Britain is heading for the biggest increase in inequality since Thatcher, and 44 per cent of UK wealth is now hoarded by just 10 per cent of the population. In many ways, the reaction to the crash achieved its goal – and Brexit looks to do the same.

Who is really taking back control?

Far from giving back control to voters, those making the decisions post referendum are by and large the same vested interests and out-of-touch establishment types that fuelled the initial sense of disillusionment, with messages backed by far right financiers like Steve Bannon and his ilk – a far cry from a man of the people.

In the corridors of power, the forceful and cagey European Research Group is steadfast in its pursuit of a hard line Brexit, with Jacob Rees-Mogg at its helm. Like so many on the Tory benches, Mogg is an Etonian and multi-millionaire. His personal vested interests in Brexit are clear: as Dispatches recently revealed, Mogg may have earned at least £7 million since the referendum through an investment firm that he partly owns.

Inside government, the Institute of Economic Affairs, a right wing ‘think tank’ with secretive funding advocating a hard Brexit and widespread deregulation, is the government's post-referendum influencer of choice. Only last year, its director was caught bragging about being on first-name terms with Ministers in “the Brexit influencing game”, adding that they have “absolutely no problem with people who have business interests, us facilitating those.”

Given the toxic combination of the leave campaign’s billionaire bankroll, vested interests in parliament, and dark moneyed ‘think tanks’, the chaos of Brexit could open the door to an accelerated shock doctrine endeavour. In many ways, it already has.

Chasing the dream of tax haven Britain

One of the first things the Tories did after the EU referendum was slash corporation tax under the guise of building a "super-competitive economy". Any excuse for tax cuts for the rich, it seems.

When they came in to power in 2010, the main corporation tax rate was 28 per cent. By 2020, it’ll be just 17 per cent, which is a full 6.5 per cent below the current OECD average. In fact, if we base a forecast of the main corporation tax rate on trends since the Tories took office in 2010, Britain is on track to have eliminated its main corporation tax entirely within two decades.

The lost revenue from planned cuts could add up to over £6 billion a year, all the while Britain faces the slowest economic recovery in a century.

Deregulation, deregulation, deregulation

Last week, reports suggested that the government could cut trade tariffs on between 80 per cent and 90 per cent of goods, with some tariffs being scrapped altogether. The policy is, quite literally, straight out of the IEA handbook. The IEA’s ‘Plan A+: Creating a Prosperous Brexit’ report, which was pulled by the Charity Commission for breaking neutrality rules, advocated selectively applying zero level tariffs.

Their ideologue cronies in North American corporate lobbying groups have seized the opportunity to swoop in calling for deregulation in areas such as agriculture and pharmaceuticals to ‘match’ the US. If they get their way, we could realistically be looking at a future of a devastating rollback of environmental regulations, and an approach to healthcare that would be incompatible with our NHS.

What we don’t know

Amid the chaos, a flood of Statutory Instruments (SIs) – a form of secondary legislation – to oversee the transfer of financial powers from the EU to Britain, have been hurriedly pushed through, often without extensive consultation.

Adding to the murkiness is a lack of answers from government. While opposition parties ask where the lines are drawn between Treasury and regulators, or if they have the capacity or expertise for expanded remits, the fragmentation of individual SIs continues to obscure the scale of their cumulative impact.

This is on top of current concerns about the aptitude of financial regulators, particularly after the Conservatives quietly rolled back much of the little financial regulation introduced following the crisis.

A taste of life to come

Predictably, there have already been forecasts that Brexit will result in yet more austerity, which this government will almost certainly delight in. They are, after all, architects of nine-years of inhumane cuts, salespeople of our state assets, engineers of corporate tax cuts, friends to the cheerleaders of disastrous deregulation, and in the pockets of vested interests.

This crisis, like so many before it, will be seized upon – and Brexit Britain will come out victorious in a red, white and blue race to the bottom.

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