Mr Brightside: Brexit, The Warning Sign We All Missed 

 

“Everything is my fault
I’ll take all the blame” 

 

Two dates, almost exactly 6-months apart, 23rd June and 8th November 2016, were a clear sign that the political world was going through a reset

 
Perhaps Biden’s victory in 2020 assured us that normality was returning. Along with this, the significance of Boris Johnosn’s sweeping victory in Dec 2019, was perhaps overlooked with the onset of the pandemic. 

2016 was a watershed event in both the US and UK. It was the first electoral signs that the traditional voter coalition was no more, and the working class, who would traditionally have voted Labour and Democrat, felt ostracised by their progressive policies and intellectual elitism. Made poorer by globalisation they turned to rogue outsiders. 

In the UK we had Farage and Johnson, and, in the US, Trump, irrespective of their backgrounds they communicated with the electorate in the way that traditional politicians seemed unable to match. 

Trump has just won a substantial mandate from the US people, and, in the UK, the fledging Reform party is fast gathering momentum. 
 

‘irrespective of their backgrounds they communicated with the electorate in the way that traditional politicians seemed unable to match’

 
Reform came to the fore just before June’s election, when Nigel Farage became fully engaged. In the election, Reform stood 609 candidates, achieved 14.3% of the vote, and won 5 seats in parliament. In addition, they came second in 98 seats, of which 89 were won by Labour. 

Six months later and Reform’s momentum continues apace. Former Tory MP Andrea Jenkyns has joined the party, and Farage has said she will be their candidate in the election for a mayor for Lincolnshire. 

Farage claims he has >1m TikTok followers, two-thirds of which are under 35, and half are under 25. This follows a More in Common survey, which found that, if they could, 50% of men aged between 18 and 35 in the UK would vote for Trump. 

By comparison, Labour’s first 6-months in government have been little short of a disaster. 

The consequences of hacking back the pensioners’ fuel allowance are becoming more acute, and there will likely be the usual NHS crisis, and more floods. Business leaders will carry on decrying Rachel Reeves’s budget, and what it has meant for a flatlining economy demonstrated by our empty high streets. 

Moreover, there is an unrelenting sense of doom and gloom coming out of government. This miscommunication means that their narrative about reviving schools and hospitals, making the wealthy pay their way, and avenging years of Tory misrule is being drowned out. Their negativity has become infectious, and there seems to be no overriding vision of where they are taking us, and uncertainty on how to react to a changing world order 

The deep political change that I referred to at outset are becoming increasingly apparent. The new Tory leader, Kemi Badenoch is creating a pound-shop Reform, and look to be the first victims of this change, with Labour following in their wake.  
 

‘Labour’s first 6-months in government have been little short of a disaster’

 
The electorate looking increasingly open to the views embodied by Farage and Trump, and continue to view orthodox politics as a huge mess of lies, conspiracies and fixes. You can add to this the rumours that Elon Musk is about to make a $100m donation to Reform. 

Whilst, Starmer, has reportedly abandoned plans for a “public dashboard” that would somehow allow anyone interested to follow the government’s progress on its new targets, he is still fixated on the use of “metrics” by which “voters can measure progress towards ‘delivery milestones’”.  

This highlights how out-of-touch traditional politicians are becoming. Voters are increasingly attracted to a strong leader, speaking confidently, reassuring them, and make them feel loved and important, rather than a number. Whether what they say is true seems to be irrelevant.   

As much of our economy is based on trade, there is the uncertainty bought about by Trump becoming president. Previously, officials in London bypassed the Trump loyalists at the top, and work with like-minded counterparts in Washington. 

This time around things will be different and the world is different place. This time around, Trump won’t be surrounded by establishment types, and there is also a war in Europe throwing up new uncertainties. You can add to this the fact that we were still in the EU. 
 

‘50% of men aged between 18 and 35 in the UK would vote for Trump’

 
If Trump makes good his electoral promises, he will, in effect, dismantle the world order created post-WW2, when the US underpinned global trade and provided a defensive umbrella for the western alliance, which especially benefitted the UK and Europe. Being the world’s policeman, whilst expensive was viewed as worthwhile as the stability it provided allowed the US to prosper. 

Trump’s view is that the US have subsidised its allies for too long, and should look inwards: “America first”. Whilst he wants the US to be No 1 in the world, he doesn’t want to be the world’s leader. The two are different.   

For some, such as China, Russia, the Gulf states, Brazil, this new approach is beneficial, leaving them free of the US interfering in their business. But for Europe, including Britain, it’s a disaster. In terms of both defence and the economy, our societies are predicated on a US-led world that will soon no longer exist. 

The immediate victim of this could be Ukraine, which is weeks away from seeing US support fall away. There is already talks of a “Yalta-type settlement sealed by Trump and Vladimir Putin over the heads of European countries”, which could be seen as rewarding Putin’s aggression and leave him emboldened. It is not only the likes of Moldova and the Baltic states that feel vulnerable, countries such as Germany, Sweden and Finland are looking over their shoulders and making preliminary preparations. 

One exception to this is Romania, where Calin Georgescu, a radical, hard-right, pro-Russia populist-nationalist who wants to make Romania great again. His anti-globalisation, anti-Nato, Eurosceptic platform, entitled “Food, Water, Energy”, stresses self-sufficiency, and aims to return the country to its rural roots. He does not belong to a conventional political party. Instead he uses TikTok to reach millions of followers. 
 

‘The immediate victim of this could be Ukraine, which is weeks away from seeing US support fall away’

 
Georgescu is a sustainable development specialist described, appropriately, as a “toxic waste expert”, claims to speak “for those who feel they do not matter and actually matter the most”. Inflation, debt, corruption and security are the big issues as the country heads for parliamentary. 

Already hard-pressed European economies are increasing their defence spending, and considering repositioning their industrial base, and repurposing factories, to enable rearmament. Even if NATO does survive European nations appear to have grasped the reality that they will need to take much greater responsibility for their own safety.  

Romania’s future direction is of real concern to NATO, as, earlier this year, they announced a $2.7bn expansion at its Mihail Kogalniceanu base in Constanta, on the Black Sea coast. When complete, it will be the largest Nato military base in Europe, and Romania plays a vital role in maintaining supply routes to Ukraine. 

In both Moldova and Georgia where Russia’s influence appears to be growing, and the story is little different elsewhere: in Serbia, Bosnia, Hungary and Slovakia, right-leaning political leaders are enthral to Putin and challenge the EU values they profess to uphold. Even in France and Germany, heartlands of the European project, the rightist Russian-incited rot has set in 

Defence aside, there are also tariffs with Trump preparing to protect US industry with a “universal” tariff of up to 20% on all goods coming into the US. In the case of China this could be up to 60%. 

Whilst NATO guidelines suggest each member state should spend at least 2% of GDP on defence, Labour, honouring pledges made by the previous Conservative administration, has committed to raising UK defence spending to 2.5% of GDP. It is unclear over what time period that increase will occur, and their might be choices to be made should the economy not pick-up. 

This commitment to increased defence spending could be at risk in the face of tariffs and potential trade war. Brexit has left us isolated and relatively impotent against the might of the US. Ironically, the EU was a trading partner comparable to the US, and one with its combined might that could hit back in a trade war with them. 
 

‘Brexit has left us isolated and relatively impotent against the might of the US’

 
As we have seen with Ukraine, todays wars are not just about bombs and bullets, there are financial sanctions, the supply of energy or food or technology. This is where a collective such as the EU thrives; when Russia moved to choke off the gas supply to individual European countries, the EU was able to step in and connect what were previously separate energy grids, nullifying the potential threat. 

The post-Covid world, with war in Ukraine and an “America first” president, isn’t the world that was envisaged by many Brexiters. The Victorian-style buccaneering free-trading they anticipated is now closed, replaced by war, trade barriers, and a survival of the fittest mentality. If Brexit did make any sense back in 2016, it makes no sense today. 

It is almost inconceivable that Starmer will want to revisit Brexit, even though polls suggest reversing it would be welcomed by voters and the governor of the BoE. The other claims for “Leave” more money for the NHS and falling inflation have both failed, as such Brexit looks more stupid today that it did in 2016. 

At some point, politicians are going to have to face reality, the world has changed and Brexit is an increasingly detrimental folly. Despite this, I can understand Starmer’s reluctance. Whilst the Tories look increasingly hobbled the threat from Reform is very real. Farage will make much of any potential U-turn and will talk-up his relationship with Trump to negotiate something better. What he wont admit will be the cost of that something better.  
 

‘If Brexit did make any sense back in 2016, it makes no sense today’

 
The economic conditions that triggered Brexit and Trump’s 2016 election still prevail today, and are the basis of voters discontent with traditional politicians.  

The UK is little different to the US; 40-years of neoliberalism has led to unprecedented inequality, stagnation in the middle of the income spectrum (and worse for those below), and declining average life expectancy. 

Whilst the economy matters, and the US has done well under Biden, there has been no trickle down effect, wealth has stayed concentrated within the top-5%. For many voters GDP, FTSE/S&P are irrelevant, they want to feel prosperous, to be able to pay the mortgage and feed the family. 

As was the case with Brexit, Americans have lost trust in their institutions and the belief that government will deliver for them. Their precarious economic situation, and the spectre of downward social mobility, has meant tens of millions of Americans voted for Trump as a way of “sticking it to the establishment”, and because many seem to believe that he has their back. Just as they did with Brexit in 2016, and Johnson in 2019. 
 

‘they want to feel prosperous, to be able to pay the mortgage and feed the family’

 
During his first term in office, and in his 2024 election campaign Trump has promised to enact the types of policies that won’t improve the lots of ordinary Americans. He favours tax cuts for billionaires and corporations which will increase inequality, alongside ending the Affordable Care Act (Obamacare); and sweeping tariffs, which are effectively a tax on US consumers and businesses. These tariffs will likely provoke retaliatory measures and a loss of American jobs. 

These policies will create massive budget deficits, which, in turn will lead to high interest rates and less investment. If he and congressional Republicans follow through on repealing the Inflation Reduction Act (which includes provisions to reduce prescription-drug prices) and Obamacare, Americans will find themselves with less access to medical care and higher costs. 

This is capitalism at its worst, run for and by the powerful, and according to the principle that money matters above all else. 
 

‘abandon neoliberalism and return to your progressive roots’

 
The culture wars also loom large in both the UK and US. Trump’s victory campaign successfully pushed the message that Democrats are obsessed with gender, race and other social issues at a time when most Americans are just trying to get by. Many voters want to see these progressive issues reversed or at least the pace of change reduced. 

Nationalism played a major part in Brexit laying the blame for voters economic wiles at the door of immigrants, and unfair trade practises from overseas, and  Trump majored on both of these.  

For both our Labour party and the Democrats, that message should be clear: abandon neoliberalism and return to your progressive roots. There needs to be a new vision of a society that “offers education and opportunity to all; where markets compete to produce better products that enhance living standards, rather than to devise better ways of exploiting workers, customers, and the environment; where we recognise that we have moved on from the industrial age to an economy oriented around services, knowledge, innovation, and care. A new economy needs new rules and new roles for government.” 

As well as revisiting their past, they need to embrace modern communications such as “X” etc., and remember to be positive not miserable! 

“I see no changes, wake up in the morning, and I ask myself
Is life worth living, should I blast myself?” 

 

‘Some familiar themes and some familiar conclusions. But, ultimately repetition is required because the issues are old and ongoing.

2016 was a watershed year, twice, within 6-months the electorates of two key, western democracies voted to stick it to the system. Brexit and the success of Trump were one and the same, the majority hitting out at the liberal establishment, inequality, and politicians who didn’t understand.

Love or hate them, both Farage and Trump are effective communicators. They speak to the voters rather than at them, and, above all, their message is positive: I can create change, you will be better off with me, I understand your frustrations. It’s almost as if they care!

This is now being repeated in Europe, voters everywhere feel poor, the GFC, Covid, inflation have taken their toll. And their “strong” leader is there to exploit this, feigning sympathy, full of empathy, and ready to blame immigration and globalisation. Nationalism is rampant.

The geopolitical world is in upheaval, and providing fertile territory for those intent on expanding their borders. Putin wants to be Catherine the Great, or at least rule over a Stalinist empire. Israel is happy to exploit the vacuum in the Middle East and expand their borders in the name of maintaining their own security.

In the UK we have a government with a 180-seat majority, that, after 6-months in-power is having a reset, although it isn’t called that. The “public dashboard” that was meant to be how we measure their achievements is replaced  by “metrics” by which “voters can measure progress towards “delivery milestones.

All this displays is government by numbers. There is no engagement with the electorate, there is no empathy, no positive thinking, just unrelenting gloom.

Me, if off to the bookies to see what odds I can get on Farage becoming PM!

Lyrically we start by rueing the lost opportunities that were signalled in 2016  with “All Apologies” by Nirvana. We finish with the need for the traditional centre-left parties to change and face up to the challenges of the hard-right with “Changes” by Tupac Shaku’

 
@coldwarsteve
 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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