Canada’s normally pro-UK ‘Globe and Mail’ summed up the prevailing external view of Brexit last week:
“We begin this editorial with an apology to you, our faithful readers. In March, we described the Brexit situation, then careening through its third year and nowhere close to resolution, as an “omnishambles.
“An omnishambles is a state of utter chaos, total disorder and perfect mismanagement – which brings us to our apology. If you’ve been paying any attention to British Prime Minister Boris Johnson, you know that, in declaring United Kingdom politics to have reached peak shambolic six months ago, we spoke too soon. Oh, did we ever.”
Within the UK, most people are totally confused by the mixed messaging surrounding Brexit. Was it effectively postponed again when Parliament passed a law meant to stop No Deal? Or is it all still going to go ahead – deal or no deal – on 31 October, as the prime minister insists. Nobody knows.
There has also been no debate about what kind of policies should be pursued after Brexit. Instead, the media has often focused on the influence of Johnson’s chief of staff, Dominic Cummings (pictured above, in casual dress).
Cummings led the Leave campaign under Johnson, and continues to carry out Johnson’s strategy today. And whether by accident or design, his apparent fondness for tee-shirts also seems to be proving a useful tactic for diverting media attention away from discussion of potential food shortages.
Behind all the spin, Johnson’s strategy is simply responding to the opinion polls above. He knows he has to win back Brexit Party voters if he wants to win a General Election. Understandably, therefore, he is going hard for the exit, declaring that he’d “rather die in a ditch” than leave after 31 October.
“Luckily” for him, he is up against Jeremy Corbyn – my local MP – who has completely failed to present a coherent policy on Brexit. And Johnson has exploited this position by focusing on the Opposition’s continued failure to answer the critical question – “what would any extension be for?”
It seems the Liberal Democrats will finally come off the fence under their new leader, Jo Swinson, and decide to campaign to remain in the EU. But we will have to wait to see if Labour’s Conference can force Corbyn to abandon his long-standing opposition to the EU.
If not, it is quite possible that the EU27 could refuse the extension request at next month’s Summit, if it doesn’t seem likely to lead to a second referendum or a new government.
Germany’s Chancellor Merkel has already set out her belief that Johnson wants to convert the UK to a form of Singapore-on-Thames. with a low tax, light-touch regulatory environment in direct opposition to the rules of the EU Single Market.
3 alternative and quite different scenarios therefore exist for the Brexit endgame:
- No Deal. Johnson finds a way round Parliament and the No Deal Act, and leaves without a deal on 31 October. He then campaigns on the theme of ‘The People v Parliament’ and blames Parliament for blocking his hopes of getting a deal
- 2nd referendum. The opposition parties threaten to install an interim government that would replace Johnson, and ask the Summit for an extension to allow an election and 2nd referendum.
- ‘Plan B’. Johnson understands the value of contingency planning. Given his key policy is to leave on 31 October, he is already exploring the opportunity for a deal on the basis of accepting the EU’s proposed N Ireland-only backstop option. He could then still campaign having (a) achieved a deal and (b) left as promised.
At the moment, Johnson clearly sees No Deal as his best option, as it means he doesn’t have to compromise. So it is no surprise that the Foreign Secretary has warned they will “test (the No Deal Act) to the limit”, in order to leave on 31 October without a deal.
The compromise of a Plan B would clearly lose him DUP and Brexit Party votes. But it might offer Johnson his best chance of staying in office, if the Opposition did agree to push for a new referendum. It would be humiliating, to say the least, if his term in office proved the shortest in history.
The next few weeks may therefore compel the ‘Globe and Mail’ to issue yet another apology to its readers.
“That couldn’t happen” are probably the 3 most dangerous words in the English language. They mean “I don’t want to think about something that might be painful“. So if you hear MPs saying a “No Deal Brexit can’t happen“, ignore them. They are wrong.
‘NO DEAL’ BREXIT IS THE LAW OF THE LAND
The issue is simple, yet seemingly too painful for most MPs and commentators to accept.
The EU Withdrawal Act (2018) became law on 26 June last year. It set 29 March 2019 as Brexit Day. It allowed for a Transition Agreement if a Withdrawal Agreement was agreed. Without a Withdrawal Agreement, the UK simply leaves with No Deal.
The law is the law, and the Act is primary legislation, which means it has since been incorporated in a whole range of laws and regulations as part of the UK’s exit preparations. It cannot, therefore, be overturned by statements that claim “There is no majority for No Deal”.
In fact, during the Committee stage, the House of Commons voted 320-114 in Committee Stage against staying in the Customs Union. It also voted 319-23 against a second referendum. And last week, MPs voted 432-202 against the proposed Withdrawal Agreement.
So if MPs say “No Deal can’t happen”, they are wrong. They have already voted for ‘No Deal’.
CHANGING PRIMARY LEGISLATION IS VERY HARD
Of course, MPs could still change their minds. But there are now less than 70 days till Brexit. And they would also have to agree this with the other EU 27 countries. These represent nearly 450 million people versus the UK’s 66 million.
Equally important is that the UK has been heading in this direction since negotiations started:
Since then, MPs have voted for the Withdrawal Act; against remaining in a Customs Union; against a new referendum; and against the Withdrawal Agreement. They have also voted for invoking Article 50 and for setting 29 March 2019 (by 498-114 votes) as Brexit Day.
So time is running out for them to change their minds.
THE ALTERNATIVES TO ‘NO DEAL’ ARE CURRENTLY WISHFUL THINKING
The politics of Brexit also make it unlikely that the government will change its mind, or be forced to change its mind:
- Theresa May knows very well that any move to “soften” Brexit by joining a Customs Union would split her Conservative Party down the middle. And any Tory MP who voted for a softer Brexit knows they would likely be deselected as a candidate and lose their job
- Labour leader Jeremy Corbyn voted to leave the EU in the 1975 referendum, and against the Maastricht/Lisbon Treaties. Many traditional Labour voters are also strongly pro-Leave. So any Labour MP voting against the Party line also faces the risk of deselection
It is therefore hard to see why simply extending Article 50 beyond 29 March would change anything.
And extending would enormously complicate the European elections in May. At the moment, the UK is not taking part in these, as it is leaving on 29 March. But if it isn’t leaving after all, there is little time left to prepare to vote on 23 May
Of course, the EU27 might agree an extension if the UK decided to hold a second referendum, as long as the vote was held before the new Parliament starts work on 2 July. But they would likely first want to know the question on the ballot paper.
Would the government ask if the voters approved of May’s Withdrawal Agreement? Would it instead ask if they wanted to stay in the EU? Or would it simply ask if they wanted to leave with No Deal?
Any of these questions are possible. But deciding between them could be very divisive in itself. And a referendum campaign could be even more divisive. Plus, its outcome would be very uncertain if voters worried that democracy was being undermined by a refusal to accept the first result.
“A week is a long time in politics” as former premier Harold Wilson famously noted. So it is possible that Sir Keir Starmer’s call yesterday for a new Labour approach might succeed. Equally, MPs might decide to support the Nick Boles and/or the Dame Caroline Spelman/Jack Dromey motions next week.
But this would only be the start of a quite complex process, which might well end with a General Election being called – and all the while, the clock is ticking.
So after the government’s defeat on Tuesday, UK businesses and those that trade with the UK must urgently begin to plan on the basis that a No Deal Brexit on 29 March is now UK law.
Please consider joining Ready for Brexit today (the advisory service I co-founded in June). It is effectively the one-stop shop requested by the CBI, and provides curated links to all the areas where businesses may need to prepare for Brexit.
Time is running out for the UK government to agree a Brexit deal with Europe. As my new analysis for ICIS Chemical Business highlights, companies need to move quickly to prepare for the “No Deal” scenario
Legendary England footballer Gary Lineker best summarised the general sense of disbelief over the state of
the Brexit negotiations when tweeting in July:
“A wealthy nation putting itself in a position where it has to stockpile food, medicine, etc., in times of peace is utter madness. What Are We Doing?”
Lineker’s concern was confirmed last month by the head of the British Chambers of Commerce who warned that “precision is what is required” regarding the Brexit process, rather than “declaratory statements”.
Yet today, with less than six months to go before the UK officially leaves the EU, businesses still do not know if the UK will simply crash out with no deal on 29 March, with no transition agreement in place. This is almost unbelievable, given that the EU is the UK’s largest trading partner, taking 44% (£274bn) of UK exports in 2017, and provides 53% (£341bn) of all UK imports, according to a July report from the House of Commons library.
One problem is that the cabinet only finally agreed on its chosen option for the new EU relationship in August. In turn, this means the civil service is only now starting to be able to advise sector groups, trade associations and other experts on the key issues involved.
A second problem is that the new Brexit department had to be created virtually overnight after the June 2016 referendum, and the average age of its staff is just 31 years. Many have no personal experience of the enormously complex issues involved.
CHEMICALS IN NO-MAN’S LAND
Chemical companies are, of course, right in the middle of this no-man’s-land. They depend on frictionless movements of raw materials and intermediates between their various EU sites, and they are heavily integrated into just-in-time supply chains with key customers such as the auto and food industries.
The UK government has recently warned of possible major disruption if there is a No Deal Brexit, and the Key UK Risks chart highlights the key economic and business risks that lie ahead.
The current gap between the UK and EU positions was emphasised in chief EU negotiator Michel Barnier’s recent evidence to the UK Parliament:
- He confirmed that the EU did not believe key proposals in the Chequers Plan for the Irish border and other super-critical issues can either work or be agreed
- Instead, Barnier proposed the idea of a “Canada plus plus” deal in the form of a Free Trade Agreement covering goods (but not services), plus customs cooperation, plus participation in health, research, Erasmus, aviation and internal security
- He also emphasised that the UK’s £39bn payment was a divorce settlement covering past UK commitments, not an up-front payment for a good trade agreement
THREE MAIN SCENARIOS AHEAD
‘May achieves a withdrawal agreement’
The UK and EU will both lose from a No Deal Brexit and so in principle they could simply “fudge” the trade issue for future discussion during the transition period until December 2020. But although both sides emphasise that 80% of the withdrawal agreement is now agreed, this only highlights that the most difficult 20% still lies ahead – issues such as Ireland, immigration and EU citizen rights, and future trade relations.
‘Markets cause a panic on Tory benches’
What happens if May does stumble at this point and fails either to gain an agreement with the EU27 or to get it safely through the Cabinet, Tory party and Parliament? As the Risks chart shows, this might well lead to financial market pressure on the pound and interest rates. This would also represent more bad news for chemical companies. If even 20 Tory Eurosceptics vote against a deal, then May would have to rely on opposition party votes, and their support looks unlikely given Labour’s “six tests” for approving any deal.
‘No deal’ scenario
Exchange rate volatility could become a critical issue for companies and investors if this scenario is reached, with the pound possibly falling towards parity with the US dollar and the euro, causing interest rates to rise. Foreign investors currently own 28% of the government’s £1.9tn debt, and concern over the value of the pound could lead some to reduce their holdings of government bonds.The Brexit Directory chart from Ready for Brexit shows the scale of the risks involved. It highlights how Brexit potentially involves almost every aspect of business – from Customs & Tariffs through Finance and Legal issues, to Services & Employment and the Supply Chain.
Of course, many major companies have already spent months and millions of euros in preparing detailed contingency plans. Some are already stockpiling key raw materials and products, and revising relevant contract clauses.
But smaller businesses do not have these resources. Surveys show that only one in seven have done any forward planning for a No Deal Brexit, and official government guidance for a No Deal has only just begun to appear. In turn, this creates a clear risk of widescale disruption, as today’s highly integrated supply chains are only as strong as their weakest link. The lack of just one raw material can stop a production line.
As Gary Lineker says, it is hard to believe this is happening. But it is, and so far “declaratory statements” rather than precise detail continue to dominate the process.
It is also easy to forget that a No Deal Brexit will not just impact the UK. US and EU-based businesses involved in a supply chain that involves a UK company face a clear risk of disruption.
This is why I have helped to launch Ready for Brexit with other industry colleagues. As the Scout motto reminds us, to ‘Be Prepared’ could be critical for business survival if a No Deal Brexit does occur.
Please click here to visit Ready for Brexit, and click here to download the full ICB analysis.
The post Is your business Ready for Brexit? appeared first on Chemicals & The Economy.
Last week, the UK’s Foreign Secretary, its chief Brexit negotiator and several junior ministers, resigned. President Trump gave an interview attacking the UK prime minister, Theresa May, and suggesting her policies would “kill” any future trade deal with the US. And the EU 27’s main negotiator on the critical Brexit issue, Michel Barnier, warned:
“On both sides of the Channel, businesses… should analyse their exposure to the other side and be ready, when necessary, to adapt their logistical channels, supply chains and existing contracts. They should also prepare for the worst case scenario of a “no deal”, which would result in the return of tariffs under WTO rules.” (My emphasis)
It was quite a week. None of us know what may happen next, as I warned when Ready for Brexit launched last month.
WHAT ARE WTO RULES?
It is now less than 9 months until the UK officially leaves the EU on 29 March. Yet according to a ReadyforBrexit poll:
- Only around a quarter of businesses have begun to plan for what happens next
- Nearly three-quarters have so far done nothing
They could have a considerable shock ahead of them, as the Brexplainer video above explains.
Currently, the UK trades with the world on the basis of around 750 agreements negotiated by the EU. Trade between the current 28 EU members is covered by the Single Market and Customs Union. But as Barnier warns, if there is no deal agreed by 29 March, then WTO rules will apply:
- WTO rules would mean that a tax, called “Tariffs”, would be reintroduced for trade in goods between the UK and the EU27. Services, including financial services, could also be impacted by restrictions on market access
- Border controls and customs checks could add time to shipments and impact supply chains. This could be particularly important for highly regulated sectors such as chemicals
- Documentation and paperwork will increase, as businesses will need to be able to prove the nature and origin of their goods, especially if they use parts or components from several different countries
HAS YOUR BUSINESS PLANNED AHEAD FOR A ‘NO DEAL’ BREXIT?
Most major businesses have been planning for a ‘no deal’ scenario for some time:
- They are increasing warehouse space, in case deliveries are delayed
- They are checking their cash flow, as VAT could be payable up-front under WTO rules
- They are working out the possible ‘no deal’ impact in key areas such Customs & Tariffs, Finance, Legal, Services & Employment and their Supply Chain
Most smaller businesses have assumed they don’t need to do anything. Yet 29 March is now only 257 days away.
SURELY ITS CERTAIN THAT WITHDRAWAL AND TRANSITION AGREEMENTS WILL BE SIGNED?
After the Brexit vote in June 2016, the chief Brexit negotiator, David Davis, was confident that all the major trade deals would be finalised by July 2018:
“Be under no doubt, we can do deals with our trading partners, and we can do them quickly… So within two years, before the negotiation with the EU is likely to be complete, and therefore before anything material has changed, we can negotiate a free trade area massively larger than the EU.”
But by September last year, he had changed his mind and was instead warning as the Telegraph noted:
“Nobody ever pretended this would be simple or easy.”
And now, of course, Davis has resigned along with his fellow Leave campaigner, Boris Johnson.
NOBODY KNOWS WHAT WILL HAPPEN NEXT
The truth is that nobody knows what will happen next. After last week, any UK business that trades with the EU, or any EU business that trades with the UK, would be wise to start planning ahead for a ‘no deal’ WTO rules scenario:
- Have you asked your suppliers about their plans for a ‘no deal’ scenario?
- Have you asked your customers about their plans for one?
- Have you checked if your ‘just in time’ deliveries will still arrive?
- Have you checked if your insurance policies will still be valid?
As the UK’s main business organisation, the CBI, warned on Friday “It will be a make or break summer:
‘With three months left to go, it is now a race against time. The EU must now engage constructively and flexibly, as must politicians from all UK parties. This is a matter of national interest. There’s not a day to lose.’
We can all hope that negotiations are successful. But hope is not a strategy. And after the events of the last week, prudent managers now need to start start planning for ‘no deal’. Please click here to watch the Brexplainer video.
The post UK faces ‘make or break summer’ as ‘No Deal’ Brexit risk rises appeared first on Chemicals & The Economy.
The UK economy set off into the Great Unknown on Wednesday, when premier Theresa May officially notified the European Union of the UK’s intention to leave (Brexit) by the end of March 2019. In response, the EU released its draft guidelines for the negotiations:
“The first phase of the negotiations should aim to agree on a divorce settlement on the rights and obligations of the UK. It would have the goal of providing as much clarity and legal certainty as possible to citizens, businesses, stakeholders and international partners on the future
“Once that political criteria is met, the EU would be open to talk about a future framework”
Critically, the guidelines confirm that the details of a future relationship and trade deal will only be discussed once the UK has left. They also suggest that the terms of trade could be very different from today:
“The future relationship as such can only happen when the UK becomes a third country“:
“Any future trade deal cannot amount to being a member of the single market. It must ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping.”
“Any future agreement will need to be ratified by national parliaments, which could take up to two years. Therefore, the guidelines foresee a transitional phase to “bridge” the time between the divorce settlement and when the UK leaves the bloc in 2019, and a future trade deal, which can only be negotiated in detail when the UK is already out.
“Any such transitional arrangements must be clearly defined, limited in time, and subject to effective enforcement mechanisms.”
As I discussed in September, this means that the UK’s trade options – given its “third country” status – are now very limited. Theresa May has already ruled out continued membership of the Single Market and Customs Union, and refused to accept the jurisdiction of the European Court of Justice. Therefore, the only 2 options available from March 2019 are a Canadian-type deal, or a fall-back to World Trade Organisation (WTO) rules.
Critically, these alternatives mean there is no “business as usual” option.
Optimists had hoped that nothing would really change post-Brexit. But today it is clear that the EU, like any club, will not allow non-members to have the same benefits as members. Instead, companies and investors are going to have to learn to live with growing uncertainty as the clock ticks down to March 2019
A new free trade agreement (FTA) for goods and services might be finalised quickly after Brexit, by 2020-2021
But it might take much longer, say to 2025 – Canada’s own deal, after all, took 7 years to finalise
Spain’s move to link a deal to agreement on a new status for Gibraltar might make it impossible to do a deal
Other EU members might follow, making Brexit a Pandora’s Box with trade held hostage to political issues
We can all hope for the best, but hope is not a strategy. It therefore seems prudent to assume, as a base case, that the UK will be operating on the basis of WTO rules from March 2019. It certainly won’t have any FTA deals in place outside the EU by then, given that the UK can’t start to negotiate these until Brexit takes place.
This is not good news as the chart from the Financial Times confirms, given that 50% of all UK goods’ exports and nearly 45% of services’ exports go to the EU:
The WTO has arbitrary tariffs such as 10% for cars, 7% for plastics, 16% for cereals and 36% for dairy products
These will increase costs for UK consumers, and reduce the UK’s competitive position in EU and other markets
In many industries such as chemicals, products move in and out of the UK as part of global supply chains
Almost inevitably, therefore, companies will start planning to relocate back into the EU, to avoid the tariff
This is the Great Unknown in action, and it will create Winners and Losers. Winners will plan for a very uncertain future, and create options which will enable them to profit from whatever developments take place. Losers will bury their heads in the sand, and refuse to prepare for any change.
On Thursday, I will look in more detail at Brexit’s likely impact on the UK consumer, which adds further complications to an already uncertain outlook.
First, the good news. It has long been recognised that the UK economy is over-dependent on financial services, and that its housing market – particularly in London – is wildly over-priced in relation to earnings. The Brexit vote should ensure that both these problems are solved:
- Many banks and financial institutions are already planning to move out of the UK to other locations within the EU, so they can continue to operate inside the Single Market
- There is no reason for those which are foreign-owned to stay in the country, now the UK is leaving the EU
- This will also undermine the London housing market by removing the support provided by these high-earners
- In addition, thousands of Asians, Arabs, Russians and others will now start selling the homes they bought when the UK was seen as a “safe haven”
This is probably not the result that most Leave voters expected when they voted on Thursday. These voters will also soon find out that Thursday was not the Independence Day they were promised. It is already obvious that Leave campaigners have no clear idea of what to do next. They are even divided about whether to immediately trigger the 2-year departure period under Article 50 of the Lisbon Treaty.
Leave voters have more shocks ahead of them, of course:
- Most believed that the UK would immediately be able to “take control of its borders” and dramatically reduce immigration. But as I noted during the campaign, the majority of immigration has always been from outside the EU – and could already have been stopped, had the current or previous governments chosen to do this
- Nor will the National Health Service suddenly benefit from the promised £350m/week ($475m) by stopping UK contributions to the EU. For a start, more than half of this money already came back to the UK from the EU, and so can’t be spent a second time
- Even more importantly, nothing is going to happen for at least 2 years whilst the Leave negotiations take place
This, of course, is where the bad news starts. What will be the reaction of Leave voters as they discover they have been fed half-truths on these and other critical issues? And what will happen as house prices begin to fall, and jobs in financial services – as well as manufacturing – begin to disappear as companies relocate elsewhere within the EU?
BREXIT VOTE WILL HIT EUROPE AND THE GLOBAL ECONOMY
The bad news is, unfortunately, not restricted to the UK. Already, alarm has begun to spread across the rest of the EU. There are strong calls for referendums to take place in 3 of the EU’s 6 founding members – France, Italy and The Netherlands. It is hard to see how the EU could survive if even one of these votes resulted in a Leave decision.
In turn, of course, this is bound to draw attention once more to the unsolved Eurozone debt crisis. Can anyone now really continue to believe the European Central Bank’s 2012 promise to do “whatever it takes” to preserve the euro, as set out by its President, Mario Draghi?
The simple fact is that the Brexit vote is the canary in the coalmine. It is the equivalent of the “Bear Stearns collapse” in March 2008, ahead of the financial crisis. And as I have argued for some time, the global economy is in far worse shape today than in 2008, due to the debt created by the world’s major central banks.
THE BREXIT VOTE, LIKE THE 2008 CRISIS, WAS NOT A ‘BLACK SWAN’ EVENT
I am used, by now, to my forecasts being ignored by conventional wisdom. The Brexit vote saw a repeat of the complacency that greeted my warnings in the Financial Times and here before the 2008 financial crisis. Thus my March warning was again mostly ignored, namely that:
“A UK vote to leave the European Union is becoming more likely”.
Instead, like the 2008 crisis, the Brexit vote is already being described as a ‘black swan’ event – impossible to forecast. This attitude merely supports the status quo, as it means consensus wisdom does not have to challenge its core assumptions. Instead, it takes comfort in the view that “nobody could have foreseen this happening”.
Critically, this means that the failure of the post-2008 stimulus programmes is still widely ignored. Yet these have caused global debt levels to climb to more than 3x total GDP, according to McKinsey. As the map above shows, they have created a debt-fuelled ‘ring of fire’, which now threatens to collapse the entire global economy:
- China’s reversal of stimulus policies has led to major downturns in the economies of all its commodity suppliers
- Latin America, Africa, Russia and the Middle East can no longer rely on exports to China to support their growth
- Japan’s unwise efforts at stimulus via Abenomics have also proved a complete failure
- Now Brexit will almost inevitably cause a major collapse in London house prices
- And it will focus attention on the vast debts created by the Eurozone debt crisis
- It will also unsettle US investors, who have taken margin debt to record levels in the belief that the US Federal Reserve will never let stock market prices fall
TIME FOR STRAIGHT TALKING ON THE IMPACT OF AGEING POPULATIONS ON ECONOMIC GROWTH
It is therefore vital that policymakers now make a new start, whilst there is still time to avoid total financial collapse. Once people begin to realise that all this debt can never be repaid, then interest rates will soar and many currencies collapse. This is not being alarmist – this is just stating obvious facts.
The critical need is to recognise that demographics, not monetary policy, drive economies. A world with lots of young BabyBoomers in the Wealth Creating 25-54 age group will inevitably see strong growth. And if more and more women return to the workforce after childbirth, this will turbo-charge an economic SuperCycle.
This is what happened between 1983 – 2007, when the world saw almost constant growth. The US recorded just 16 months of recession in 25 years. But last year saw global GDP decline by a record amount in current dollars, more than in 2009 – a clear warning sign of major trouble ahead.
The issue is very simple. Common sense tells us that the combination of a 50% increase in global life expectancy since 1950, and a 50% fall in fertility rates, means that the world has now reached the “demographic cliff“:
- 1bn ageing Boomers are joining the low-spending, low-earning New Old 55+ generation for the first time in history
- They will be more than 1 in 5 of the global population by 2030, twice the percentage in 1950
This is good news, not bad. Who amongst us, after all, would not choose to have 20 years of life expectancy at age 65 instead of dying? That is today’s position in the Western world. And people in the emerging economies are catching up fast. They can already now expect to live another 15 years at age 65.
The trade-off is lower, or negative growth. People in this New Old 55+ age group already own most of what they need, and their incomes decline dramatically as they approach retirement.
But this simple fact of life has never been explained to voters. Instead they have been told since 2008 that policymakers are confident of returning the economy to SuperCycle levels of growth. No wonder they are growing restless, and starting to mistrust everything they are being told by the supposed experts.
CONCLUSION – TIME TO RESTORE TRUST WITH PLAIN SPEAKING
Policymakers and the media now have a grave responsibility, as do do all of us.
It is critically important that policymakers now recognise they must immediately reverse course on stimulus policies, and come clean with voters about the real economic situation.
Of course this will result in very painful conversations. But the alternative, of ignoring the warning provided by the Brexit vote, is simply too awful to contemplate.