OVER the years, you tend to become inured to pretty much all of the nonsense emanating from politicians about the economy but occasionally you read or hear something that evokes a mixture of extreme irritation and utter exasperation. And so it was when reading an opinion piece from Lord Andrew Dunlop, parliamentary under-secretary of state at the Scotland Office, in Scottish Engineering’s latest quarterly review.
Writing about the Brexit vote aftermath, Tory peer Lord Dunlop declares: “Due to the decisions taken by this Government, our economy is strong and able to weather these uncertain times.”
What bunkum and poppycock.
Let us look at what the Conservative Government has actually “achieved”, and what it has not, since it came to power in 2010.
It has failed to achieve anything even vaguely resembling a convincing or balanced UK economic recovery, with former Chancellor George Osborne’s vision of “a Britain carried aloft by the march of the makers” having failed to materialise. And its savage and pernicious austerity programme has strangled the UK economy and choked growth, hitting tax revenues and leaving the public finances in grim shape.
Oh, and then there is the other big thing the Conservative Government did – decide to have the unnecessary referendum on EU membership that triggered the Brexit vote.
The vote has in turn forced the Bank of England to take emergency action to try to fend off recession.
Lord Dunlop’s upbeat epistle sits rather incongruously in the quarterly review, which shows the Scottish engineering sector has in the latest three months suffered its sharpest fall in order intake since the 2008/09 recession.
The fact the sector has suffered seven consecutive quarters of decline in both order intake and output volumes shows the UK economy was already in very poor shape even before the omnishambles brought on by the Brexit vote. The sector’s export orders have now declined for 12 straight quarters.
The makers have not been marching for a long time, and were not doing so even before the oil price crash made life even tougher for Scottish engineers.
To be fair to Lord Dunlop, he notes in his opening paragraph that he did not personally support an exit from the EU.
However, taking the same type of bafflingly upbeat, Pollyanna-type approach apparently adopted by Prime Minister Theresa May towards the Brexit vote, Lord Dunlop adds swiftly: “It is the role of the UK Government to implement that decision and, as the Prime Minister has said, we are going to make a success of it.”
Good luck with that, Lord Dunlop.
Many in the business community have tried to move on quickly from their initial disbelief, horror and dread over the June 23 Brexit vote, taking the pragmatic view they are just going to have to navigate their way through the ensuing economic damage as best they can. There are parallels here with the stiff upper lip approach seemingly adopted by Conservative politicians who had favoured staying in the EU, including Mrs May and Lord Dunlop.
But what is really interesting is that, try as they might to be upbeat, most senior company executives are being sensible enough not to kid themselves on that the Brexit vote will open up a brave new world of opportunities.
A survey published this week by the Institute of Chartered Accountants of Scotland shows 74 per cent of finance chiefs believe Brexit will create challenges for their organisations. Only 28 per cent see it creating new opportunities. And 45 per cent of finance chiefs now expect the UK economy to decline, following the Brexit vote, with the bulk of the remainder seeing zero or only negligible growth. In the previous annual survey, only six per cent predicted a decline in the economy on a 12-month view, so the decline in optimism is truly precipitous.
Meanwhile, three-quarters of Scottish information technology companies fear Brexit will have a detrimental impact on their access to skilled staff, a survey published this week by industry body ScotlandIS shows. IT companies also expect export prospects to be damaged.
Brexiters will no doubt seize upon yesterday’s survey from the Chartered Institute of Procurement & Supply, which shows a rebound in UK manufacturing activity in August, following a plunge in July.
However, this looks to have been in large part a mechanical response to the pound’s plunge on the foreign exchanges, a tumble that is hardly something to celebrate given it reflects the fact the UK’s already gloomy economic prospects have become much more bleak with the Brexit vote.
CIPS’s manufacturing survey also shows input and output price inflation surging to five-year highs. So economists’ warnings of the danger of stagflation may prove prescient.
Scottish Engineering chief executive Bryan Buchan warns: “The first waves of the economic tsunami that is Brexit have already landed on our island shores...We appear to have been hit on all fronts.”
He notes, unlike the last recession, Brexit “affects the UK in isolation” and flags serious concern among engineers that the worst may be yet to come.
While businesses may be putting on a brave face, surveys indicate they are generally fearful of, and appalled by, the consequences of the Brexit vote.
And we should heed revelations in the ICAS survey that companies are already moving to cut jobs and investment, with some considering shifting operations from the UK to countries that will be staying in the EU.
The damage from Brexit in coming years and decades will be major. And, whatever Lord Dunlop might think, the UK economy is not strong and it has definitely not been well-positioned to weather a storm of the Conservative Government’s own making.
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