However bad things are, they can almost always become worse. Victory by fanatics on a modest share of votes is all too likely under the UK’s first-past-the-post system, with several parties in competition. Since the two biggest parties are likely to be an English nationalist party and a hard-left socialist party, the outcome of the December 12 election might harm Britain irreparably.
With the enthusiastic promotion of Boris Johnson, now prime minister, and the connivance of Jeremy Corbyn, Labour leader, the country is already embarked on the self-harm known as Brexit. The latest National Institute Economic Review argues that the economy would be around 2.5 per cent bigger today if the result of the 2016 referendum had not been Leave. This performance, particularly dire for an economy already damaged by the financial crisis, is largely due to the weakness of business investment. According to the Green Budget from the Institute for Fiscal Studies, “Business investment has witnessed the most sustained period of weakness outside of a recession and is now the lowest in the G7.”
One explanation for the weakness of investment is uncertainty over when, how, or even whether the UK is going to leave the EU. Some will argue that it is essential, for just this reason, to get it done. That is not so: first, the deal reached by Mr Johnson is a really bad one; second, it will not end uncertainty, precisely because it is a bad one.
The National Institute’s article argues that the long-run impact of the deal would be to lower real gross domestic per head by 2.6 per cent, relative to what it would otherwise have been. This would amount to the loss of between two and three years of growth, even under optimistic assumptions about prospective growth of output per head.
The notion that a new trade deal would be finished by the end of 2020 is also a fantasy. It is likely to take many years, with more cliff edges threatening a “no-trade deal” option along the way. It took Canada and the EU five years to negotiate their trade deal. One with the UK will be more difficult: Britain is a bigger and so potentially more disruptive trading partner than Canada; EU mistrust of UK intentions is high, and, above all, UK insistence on a right to regulatory divergence must look like a declaration of war on its own standards. Given all this, uncertainty will surely continue for many years unless the British government declares a unilateral “no deal”. In that case, there might be certainty, but via a terrible resolution.
Since “getting it done” quickly is a fantasy, I am delighted Mr Johnson has put his bad deal on ice to pursue the alternative of a general election, even though it is likely to be dreadful.
Yet the outcome seems to depend on how Leave and Remain votes split. Today, it looks likely that the Conservatives will get a higher share of the Leave vote, at the expense of the Brexit party, than Labour or the Liberal Democrats will get of the Remain vote. Electoral Calculus currently predicts a share of 35 per cent of the vote for the Tories, 25 per cent for Labour, 18 per cent for the Liberal Democrats and 11 per cent for the Brexit party. It adds that there is a 52 per cent chance of a Conservative majority, an 11 per cent chance of a Labour majority and a 37 per cent chance of a hung parliament.
This last possibility is enticing. In their current incarnations, I would not trust the Tories or Labour with a majority: under the Tories, the UK would get a hard Brexit, prolonged uncertainty and a regulatory race to the bottom, which is likely to be accelerated by a one-sided deal with the US; under Labour, it would get a softer Brexit, but a government that wants to take the UK out of the west politically (Mr Corbyn’s goal) and economically (that of John McDonnell, shadow chancellor). How can a country dependent on the confidence of global investors survive a government committed to expropriation? Policy Exchange is persuasive on these risks.
Yet, under a hung parliament, the UK could negotiate a new deal and then put it to the people for confirmation. The sillier ideas of the two main parties would also have to be abandoned. After such a sobering failure, both the Tories and Labour might even consider moving away from some of their more extremist posturing.
I reject the demagogic nationalism of Mr Johnson and the utopian collectivism of Mr Corbyn and pray the electorate will do so, too. I want them both to lose so badly that the centre holds the balance in parliament. I want the path toward Brexit to be reconsidered. Is that going to happen? I fear not. But we are entitled to hope at least. If we are to win, none of our parties must do so.
martin.wolf@ft.com
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