The UK economy is “frankly doomed”. So says billionaire investor and former president of the Oxford University Conservative Association, Guy Hands. Speaking to the BBC’s flagship radio news programme on BBC Radio 4 on Monday, Hands said the reason for the UK’s dire economic state was the “completely hopeless” Brexit deal.
The situation is so serious, claims Hands, that the UK could need a financial bailout from the International Monetary Fund. That’s unless the new prime minister can renegotiate the deal with the European Union. Without a new deal, Hands says, the UK is on a path to being “the sick man of Europe” – a characterisation of Britain from the 70s, at a time of industrial upheaval and poor economic performance.
Conservative Party should own their mistake
Hands, chair of private equity firm Terra Firma, made his comments following a tumultuous period of financial instability, brought on by the recent ‘mini-budget’. However, he believes the causes of the UK’s economic problems go back much further.
Hands holds the Conservative government completely responsible and said they must “own up to the mistake they made in how they negotiated Brexit”. He added, the government must move on from their “own internal wars”. Failure to do so would result in “steadily increasing taxes, steadily reducing benefits and social services, higher interest rates” and “increasing levels of poverty in the UK”.
Based on the last 12 years of Tory rule, the chances of the government accepting any responsibility for the state of the nation, or apologising for the harm done, seem extremely remote. More likely, even with a new PM, we’re in for more denial and delusion, especially when it comes to their failed Brexit project. The Tories don’t do sorry. Or reality, it would appear.
Another costly failed experiment
Short-lived former PM Liz Truss was an avid advocate of a low-tax, high-growth economy, despite no evidence that a ‘trickledown’ policy works. Professor Nicholas Barr of the London School of Economics said recently “there is a wealth of evidence against tax cuts alone producing growth”.
In his interview today, Hands also commented on the government’s “dream of a low-tax, low-benefit economy” – the whole ethos behind Brexit. In regard to Truss, he said the trickledown policy had been tried but was something that was clearly “not acceptable to the British people”.
In the midst of a cost-of-living crisis, Hands said it was not just those at the bottom that are suffering the consequences of “a disastrous economic state” caused by a “completely hopeless” Brexit deal. Poverty was now “moving up the economic level” and affecting “middle class people who will not be able to pay their mortgages” and are “finding it difficult to make ends meet”.
The truth about Brexit cannot be hidden any longer
According to Hands, there is a “possibility of turning around the economy”. It would, however, require leadership from someone with the “intellectual capability to renegotiate Brexit”. Whether or not he believes our new PM fits the bill, or can pay it, is not clear.
What is clear is that, new PM or not, the Brexiters are still in charge. Based on earlier evidence, they do want a new deal, though not necessarily one that Hands would approve of, that the EU would accept, or that would benefit the UK economy.
Until the government – whether this one or the next – starts being honest about Brexit and our relationship with Europe, it is difficult to see how the situation can improve. Brexit has proven to be as damaging and disastrous as pro-Europeans said it would be.
The government will no doubt claim they have a plan, that everything will be fine given time, and that they know what they are doing. They will continue to blame anyone but themselves for the state of the country.
But, the damage wreaked by Brexit cannot be hidden any longer. The rest of the world can see it, and increasingly, so can the British public. It’s high time the government, the opposition and the mainstream media, opened their eyes too.
There is a better deal to be had. As members of the European Union.