(This blog entry is about British politics. If you aren't interested, don't bother commenting. I have to live here, so it's a matter of considerable importance to me. NB: While I appreciate that other countries have their own problems—one could point to Donald Trump's presidential campaign as reflecting the same disturbing populist reactionary xenophobia—this isn't about you, it's about me, and comments referring to the US presidential campaign will be deleted (until we pass the #300 mark, as is customary here).)
Brexit is going to kill people. And soon.
This week saw the Conservative Party conference in Birmingham, and in among the rather scary exclusionist rhetoric it became apparent that the Nasty Party has decisively swung away from representing the interests of the business community and is staking its future on the xenophobic anti-foreigner vote which came out of the woodwork to swing the Brexit referendum in June. In particular, the Prime Minister has a plan for Brexit and it appears to be trending towards the hard option; that her priority will be to clamp down on immigration, and to do so she will abandon the free movement of people that is a keystone of the European Union.
Note that the EU has made it glaringly clear that retaining free movement is a non-negotiable prerequisite for retaining access to the European single market—they made this clear to Switzerland earlier this year—and there is clearly an appetite among other EU heads to state to drive a hard deal with the UK.
Now here is a graph (sorce: xe.com):
What does it mean?
The UK is a small, very crowded island—hence much of the political pressure to cut down on immigration.
But Britain is not self-sufficient. We don't mine and export raw materials (the last big domestic resource extraction sector was oil, and North Sea reserves are in terminal decline and depressed by external factors, notably the drop in world markets). We export goods and services. Most of the physical goods we export rely on reprocessing materials imported from overseas, so a weak Pound means the cost of raw materials or components rises—and generally they must be paid for before the processed final product can be exported. (Clue: we're part of a global supply chain.) Services are another matter: if I write a novel and sell it abroad, that's a plus on the balance of payments sheet. But the biggest part of the British service sector is banking and finance.
A hard Brexit means that we will lose access to the Single Market—the WTO default terms the hard Brexiters so glibly talk about mean that anyone exporting goods from the UK will have to pay a 20% tarrif, and exports to the UK from the EU (our largest trading partner by a huge margin) will also be liable for duty at that rate. This is in addition to VAT at 20% (and dislocating UK VAT and tax revenue from the rest of the EU is going to be a nightmare on its own). We have to buy those raw inputs using funds in Pounds Sterling, which (see graph above) has just fallen off a fucking cliff. Translation: anything we buy from overseas now costs about 10% more than it did a week ago, and Sterling has dropped by roughly 20% since the Brexit referendum 4 months ago, to an all-time historic low.
But what about services? Well, a hard Brexit means an end to passporting, and the financial services sector will take a hit. Currently London punches way above its weight as a global financial center because the unacknowledged truth is that Sterling is the EU's unofficial secondary reserve currency—with Britain in the EU, if the Euro turns wobbly, funds managers can switch to Sterling, and vice versa. If Britain leaves the EU Sterling will no longer be a safe haven for EU investment vehicles, and so a rather large chunk of the financial services industry will go down in flames (or, more accurately, relocate to Frankfurt, Paris, and even Dublin).
Upshot: the service sector will be hit, and hard, at a point where the goods-producing industries will be undergoing a protracted cash flow crunch: the labour they apply to imported raw materials to turn them into exportable products will be cheaper in global terms, it's true, but they'll be buying the raw materials on credit using an unstable, rapidly devaluing currency. (See also Russia. Except we don't have Siberia to strip-mine.)
But here's the worst part of all.
The UK is not self-sufficient in food. The UK imports roughly 40% of the total food consumed, and the proportion is rising. Nor is it obvious that we can produce more food: to get close to self-sufficiency from 1939-45 required a world war, mobilization, and the conversion of all private gardens into kitchen gardens, along with rationing, and the UK population has grown by roughly 25% since then. While modern technology-intensive agricultural techniques can improve productivity, this is capital intensive, and the one thing a Post-hard Brexit Britain with a crashed currency and a financial sector fleeing to the continent is going to be short of is capital. Also, it takes years to roll out that sort of infrastructure upgrade, even if the will is there.
Food bank use is at record levels and hunger is a desperate concern for low-income (including low-earning employed) families. And the currency we buy our food imports with just crashed 10% this week, and 25% over the past four months.
If a Hard Brexit happens, then Sterling will almost certainly dip below Dollar parity for the first time in history. Imported foods will cost 40% more in real terms than they did in 2015. And there will be additional 20% tarrifs levelled on top.
I'm calling Hard Brexit a road to mass starvation and famine-grade deaths on a scale not seen in the UK since the Hungry Forties (that's the 1840s, not the 1940s).