Recently, William Keegan, a senior economics commentator for The Observer, expounded upon the damage that Brexit wrought upon the British market, writing:
We spent almost 45 years opening our markets to what is now known as the European Union, adding the considerable benefit of membership of the single market—not least thanks to Margaret Thatcher and Jacques Delors. From the abandonment of monetarism onwards, the emphasis of British economic policy was on attracting overseas investment. But in one fell swoop—thanks to a wholly unnecessary referendum, founded, alas, on ignorance, prejudice and lies—the Cameron government opened the back door. The single market was designed, from the UK’s point of view, to boost trade with and investment from the EU, but the exit was opened and Britain has suffered.
Keegan claims that Brexit cost the UK “the only good thing Margaret Thatcher ever did,” elaborating on how the British Labour party, while not overconfident, is heading the party’s political direction through talk of the need for investment-led growth and the importance of investment in both the public and private sectors. Still, Keegan views Labour’s approach as lacking “the confidence-building assurance of a public—indeed, electoral—commitment to rejoin the single market.”
He continues: “The single market was designed, from the UK’s point of view, to boost trade with and investment from the EU, but the exit was opened and Britain has suffered. We are now experiencing the consequence of the bad influence that Thatcherite political economy had on our polity, and the rejection of the good.” What an incongruity to think that the problems that so deeply divided Britain of the 1980s with Thatcher’s focus on “rolling back the frontiers of the state” as she privatised state institutions across the country that led to long-term unemployment, that same state today, Keegan observes, “is now impeded by the rejection of her greatest beneficial contribution to the country—namely membership of the single market.”
Keegan is not alone in vituperating Brexit’s effect on the country’s economy. From the recent initiation of customs checks at the EU border, to post-Brexit food controls on food and farm imports, to the immigrants who are facing deportation despite holding Home Office certificates, the problems of Brexit have only just begun.
Noting that the biggest deficit of Brexit has been its maleficent impact on the pound and thusly on inflation, Keegan believes the only way to mitigate the damage done to the country’s image of attracting inward investment would be for the UK to rejoin the single market. Without a firm commitment to rejoin the single market, he believes even the foreign exchange market and the British pound would suffer.
Yet, all is not gloom and doom as Matthias Rau-Goehring, economist in the International Policy Analysis Division of the European Central Bank, claims that this is not an inevitability, commenting:
Turning to foreign exchange transactions, the latest BIS Triennial Central Bank Survey confirmed London’s dominant position in euro foreign exchange trading. The UK financial markets accounted for around 42% of total transactions involving the euro in 2022. That is 6 percentage points lower than in the 2019 survey, but close to the level prevailing at the time of the 2016 Brexit referendum. This points to the City of London’s strengths in foreign exchange markets in terms of liquidity, legal system, market infrastructure and time zone.
Where Keegan sees that a commitment to the single market “would have a beneficent impact on the pound,” Rau-Goehring contends that London is where there is a notable decrease in euro-denominated activity since Brexit with the trading of OTC (over-the-counter) interest rate derivatives (IRDs). He remarks, “In line with its leading role in global foreign exchange markets, the City of London is still the principal trading centre for euro-denominated IRDs.”
Meanwhile, Britain faces other challenges in the run up to the national election expected later this year as the International Monetary Fund (IMF) warned Britain's Conservative government two weeks ago not to cut taxes due to high levels of public debt and growing demands on services. The admonition from the IMF's chief economist, Pierre-Olivier Gourinchas, came shortly after the body cut its forecast for British economic growth next year as part of a wider forecast update.
UK Treasury chief Jeremy Hunt was expected to cut taxes in the coming months as part of an effort to boost support for his Conservative Party, which trails gravely in most opinion polls. The next general election must be held by January 28, 2025, but British Prime Minister Rishi Sunak recently suggested that the election could take place as early as May where economic issues linked to Brexit are playing a primary role in voters’ political choices.
It is vital to understand that the world's highest net exporter of financial services rests in London which is also the leading centre for international bank lending, derivatives markets, money markets, international insurance, trading in gold, silver and base metals through the London bullion market and London Metal Exchange, and the issuance of international debt securities. So what happens in London not only affects the British economy but also the world’s economies and it is not clear at all that Brexit has damaged London’s standing.
Aside from the decrease in Euro-dominated activity in London, there is a notable increase in activity in the UK foreign exchange march according to the Foreign Exchange Joint Standing Committee (FXJSC) that released the results of its latest semi-annual survey of turnover in the UK foreign exchange market. The survey, conducted in October 2023, showed continued growth in the UK FX (foreign exchange) market and that London is still the top foreign exchange huge despite the current impacts of Brexit in other areas.
In London, while inflation is expected to fall by Spring with the FTSE down and companies trading in gold are flourishing, other political questions remain concerning the oversight of economic institutions and AI regulation. Yet the biggest problem all political parties from the US to the UK, is the recycling of government officials as they exit the public only to occupy lucrative positions within private sector. Case in point is the recent appointment of Britain’s former finance minister, Chancellor of the Exchequer, George Osborne, to Coinbase as an advisor. Aside from being the world's largest publicly traded cryptocurrency exchange, Coinbase was sued by the Securities and Exchange Commission in January that alleged that the company was “flouting rules and selling unregistered securities.” From holding public office to heading some of the worlds most influential, private economic institutions, there is a problem of public officers guarding their future vested interests in the very private firms they are supposed to regulate.
Whatever the financial damage that Brexit has or has not amassed to the British market, one thing that needs scrutiny is the all-too-common revolving door from the public to the private financial sector where government officials extend favors to private financial institutions in exchange for future lucrative positions. Aside from the political conflicts of interests of these appointments within the financial and other industries, is a deafening silence within legacy media that fails to criticize the collapse of the private and public sectors as managed by the world’s elite.