One of the realizations of most people following over 2 years of tiresome banter and confusion amongst politicians concerning BREXIT is that, in reality people do not really know the consequences of either a deal with the EU or, indeed, a departure without a deal. Based on the evidence available it is more than apparent that a no-deal exit would result in a long drawn out period of slumpflation facilitated by the parallel failing macroeconomic policy of quantitative easing (QE) and a prolonged period of "austerity".
The first problem
It is more than apparent that to have the outcome of a referendum on BREXIT to be so finely divided between those for and those against that British political parties were never going to come up with a solution to satisfy all voters. They typically slump into assertive modes in order to win their "argument" even when these are not evidence-based. The only solution to such situations is to improve the quality of information on the options that is disseminated to the electorate, even after a referendum, so as to be able to identify the full range of options.
DABs-Decision Analysis Briefs
What has been lacking is the production of Decision Analysis Briefs1 (DABs) on all sectors and including household impacts of any decision option, including a no deal scenario. These should have been circulated to the electorate.
DABs are quantiative audits of the costs impacts of decision options and including, in this case, a no deal to all sectors unit performances and the consequences for prices and wages, household budgets and employment.
Different industries and sector associations have produced a lot of material on this topic and these add up to a dire situation. However these do not work from a comparable and consistent analytical basis for analysis whereas DABs provide this transparency and clarity. DABs would follow a due diligence set of analytical procedures and be evidence-based.
With cost-push inflation is is clear that real profits in the economy will fall back and real wages will decline even more than they have already under QE. We believe the projected decline in national income of 8% is a gross underestimate.
The current government appears to think that by threatening an election, the Labour Party will back off for fear of the might of the combined forces of the Conservative and Brexit parties along with the Liberal democrats recent surge.
However, Labour is calling the government's bluff by first of all working to make no deal contrary to legislation. Even if they fail and an election is called, contrary to assumptions, it is likely that Labour could win. They could achieve this by exposing the true consequences of a no deal in more quantitative and realistic terms by generating and circulating DABs and
As proponents for a professed support for the freedom of all, the Labour party has the opportunity of demonstrating a needed levelling off of the paranoia concerning "The Commission" and their real or imagined intent to harm Britain. In the end, the Jury, in this case, is the EU electorate including the UK and it is their mutual interests that should remain as the principal strategic objective. By balancing the DABs on the British case with additional DABs on the EU consequences of a no deal BREXIT and disseminating this information through Labour's associated EU-based political parties including the Greens, would change the situation. We would at last move from a position of needless contention and confrontation to one of mutual understanding and sound proposals for mutual collaboration around practical imperatives
One of the mistakes made by the European Commission was to emphasise withdrawal conditions before understanding what a deal might be, since withdrawal conditions are dependent upon the final structure of a new trading arrangement. As a result the European electorate, just as in the case of the current UK electorate, still do not have a clear objective view of what is at stake in terms of their wellbeing. DABs could be extended to include estimates of the impact on the EU on a sector by sector basis. As a result they can be used to help structure and inform the negotiations under an extension with the EU. With the Member State electorates becoming more aware of the true consequences of a no deal BREXIT it is obvious that, behind the scenes, the Commission would be encourged to review options so as to obtain a deal that also protects the interests of their own electorates. In this way we could end up in a win-win situation. European Options a member of the AP Europe Group has posted a leader on this issue. Although we share their views on this particular issue, their views on other issues do not necessarily coincide with our view on those issues, where we happen to have one.
On the question of the border in Ireland, there are, indeed, technical solutions and we will provide information on these in the next post.
1 Chapter 26, Parliament, pages 281-282. "The Briton's Quest for Freedom - Out unfinished journey ...", McNeill, H. W., Hambrook Publishing Co, 418 pp., 2007, ISBN: 978-0-907833-01-7.
ibid: in several chapters dealing with electoral processes and policy development
ibid: Note 104 page 400.
also referred to in the article: Policy Decision Analysis & the Real Incomes Approach