The UK has felt the impact of the latest dramatic economic fall from Truss and Kwarteng’s mini-budget in the last few weeks. A huge, short shock wake-up call presented itself to voters. The turmoil forced the Bank of England to intervene to prop up pension funds, demonstrating that the government had no scruples about gambling with the future of millions of people. The pound fell again, increasing prices for businesses and individuals, who were already under financial pressure, for any imported goods.
The tax-cutting budget favours high earners
The actions of the government show that this government, the ERG and Tufton Street devotees have no qualms about unleashing financial hardship on the many in order to protect the sovereign elite.
Truss’s track record
Service providers already had the experience of the incompetence of Liz Truss’s appalling trade deals. Truss recently claimed in an interview that she supported British businesswomen and aimed to level up the North East.
In practice, she erects massive barriers to the business we had already established. I recently wrote about her UK Swiss deal. Truss disallowed project work sourced via recruitment agencies which means British contractors cannot serve most Swiss customers within my industry sector and many others. She neglects our historical ties to a large market in the Auf Wiedersehen Pet model.
We had no way of staying afloat We had to leave on the ferry boat Economic refugees On the run to Germany We had the back of Maggie's hand Times were tough in Geordieland We got wor tools and working gear And humped it all from Newcastle to here There's English, Irish, Scots, the lot United Nation's what we've got Brickies, chippies, every trade German building, British-made Nae more work on Maggie's farm Hadaway down the autobahn
(Mark Knofler, Why Eye Man, The Ragpipers Dream)
Of course, the Brexit deal shares the same problems as the UK Swiss deal. While earnings in the South East have faired better, recent statistics showed that wages in the North East have gone down in the last few years. This comes as no surprise; our region and many businesses here had a long relationship with Europe, in some firms 40-50% of trade was with Europe. In my own case, 80%+ of my project catchment had long been Europe and Switzerland.
The Auf Wiedersehen Pet model
The Auf Wiedersehen Pet model, working on projects in Europe, bailed many Geordies out. This was a lifeline. Within my own family, my cousins were able to save up for a deposit on their home only because of projects in Germany in the building trade and several other European locations. With a young family, it was very hard for my cousin’s husband to work away for weeks on end without returning home at weekends. On one occasion, a project arose in Hong Kong, which he accepted thanks to assistance from both sets of grandparents with child care back home. Intercontinental work was not the norm and in services provided on-site, this remains the case. The trade gravity model states a country trades most with its closest geographical market.
Under the Truss regime, mortgage rates have shot up. It becomes much harder for financially challenged younger people to afford to purchase their own homes. A jobs and project market of 33 European countries and Switzerland is a welcome feature of single market membership which our government willingly traded for their own elitist chaos and poor trade deals. With excellent links to Europe via Newcastle airport and DFDs Seaways, Europe was historically a preferred jobs market for North Easterners. We, the many. are blocked from economic prosperity, growth, and the establishment of a future for ourselves and our families. In return for this huge sacrifice, the very few elites of Tufton street, who funded campaigns to leave the single market and EU in order to escape regulations that hindered their own gain, benefit at huge costs to us.
Their main issues were:
- The EU tax avoidance directive which cost people like Jacob Rees Mogg several million pounds per year
- European regulations established to protect workers and the environment
The slow puncture
Before Brexit actually happened, the very notion of leaving the single market caused economic losses to trickle down from the day the vote was announced. Relocation agents in The Netherlands suddenly started to receive calls from international companies seeking a European base, who saw Rotterdam or Amsterdam as a safer haven than the UK. This trend has increased.
Scrapping bankers’ bonuses and lowering taxes are no replacement for many sectors to single market access.
The losses tickled down before the end of the transition. This continued. It was not necessarily the huge immediate drop we witnessed this week. The losses are there. For example, specialists leaving the NHS will no longer contribute tax revenues from their salaries to HMRC. Musicians who have lost access to touring in Europe don’t contribute to HMRC as much as before. Companies, who relocate to the EU/EEA, remove corporation tax and jobs from our country.
Losses caused in terms of knowledge exchange and skills transfer are unquantifiable, but in my industry alone, they are already huge. Ultimately, these skills losses lead to less growth in economic terms. Specialists in software or engineering have often gained important new skills on projects in Europe which are brought back to staff and transferred on British projects. This can be one of the most enjoyable parts of my own work. I’ve recently coached new developers who are rising in the ranks having started as apprentices for a UK client.
Foreigners and migrants are not the problem
A common view is that foreigners and migrants are draining financial resources from the UK….
Boris Johnson flooded the House of Lords with peers so he could, under the mantras of “Get Brexit done” and “Will of the People” allow the Tory Party to achieve its own aims. Those who own and influence newspapers, the media and social media will spread their own narratives. Those migrants and refugees flee terrible situations. In return for some support and a welcome, there are jobs for them to fill. If a country does well economically and businesses, large and small, can flourish, there are jobs for more people, better revenues for HRMC and solid revenues for services. The migrants in the boats are not the danger. They have not gambled with pension funds, the currency, and our economy. That misdemeanor is owned by the government.
True colours
Recent events should show the public the true colours of this government, one which has not only last week, but ever since the vote leave campaign and Brexit, risked the futures of millions of people and the environment for their own gain. The role of government is to serve the people, not itself. Anything else is not acceptable. Project fear is project fact. It is here now.
