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Even now, Boris Johnson must know that no-deal Brexit is madness

William Keegan
Photograph: Reuters

‘While we were strongly opposed to the Trotskyist revolution that has taken place in this country, now that it has occurred the important thing is that it should be made to work properly.”

It was on something like those lines that a few of us wrote a parody of a Financial Times leading article many years ago on a very slow news day, when I was working for the FT.

There haven’t been many slow news days since the June 2016 referendum; but the memory of that FT parody has come back to me in the light of the elevation to prime minister of the (at the time of writing ) United Kingdom of you know who.

Another memory is of a senior civil servant saying to me during the disastrous monetarist period of early Thatcherism: “Ministers do crazy things: my job is to see that they do crazy things properly” (or words to that effect). How, for goodness sake, can Whitehall officials, with the best will in the world, make this crazy no-deal scenario work properly?

Treasury officials have not been the flavour of the year with a government apparently dead set on heading for the Brexit cliff. Why? Because they have been warning of the catastrophic consequences of “no deal” – not to say of the somewhat less catastrophic consequences of any Brexit deal – hard, soft or in-between.

Recently, the Office for Budget Responsibility (OBR) has added to the warnings. Even on the International Monetary Fund’s “less pessimistic” no-deal Brexit scenario, the OBR sees damaging consequences for household incomes, the public finances and the pound.

In which latter context, it is worth emphasising that the uncertainty that followed the referendum – and the huge hit to business confidence – has meant that the traditional boost to investment and exports (and import saving) from a devaluation has been conspicuous by its absence. The trade balance is terrible. The collapse of confidence in the pound has been bad news for most of us.

The plain fact of the matter is that Brexit is crazy and our latest prime minister must know it.

Now, while he was in the course of losing the race against Johnson, Jeremy Hunt was foolish enough to move to the ultra-right, no-deal fringe and complain that “the EU has deliberately chosen to make the UK poorer”.

Perhaps he really is deluded and believes that a period of 'optimism' can work miracles

Sorry? Who has chosen to make the UK poorer? Not the famous 17 million who voted Leave in the referendum without being informed of the consequences, let alone the lies. No, it is the Conservative party, under the leadership first of Theresa May, and now of Alexander Johnson. This once-great party subscribes to a policy of self-harm for the economy while fantasising about arranging a handful of trade deals that would in no way compensate for the (70) perfectly satisfactory trade deals we already have with, or via, the EU and which would be sacrificed by heading for the 31 October cliff.

There have been times when mistaken economic policies have harmed our economy – the sado-monetarism of the early 1980s, and the Osborne austerity programme since 2010. There have been times when “events” have caused serious disruption – the second world war and its aftermath necessitated an austerity programme until the wartime economy adjusted to peacetime; and the oil-shock of 1973-74, when oil prices rose fivefold, was what economists call an “external shock”. It aggravated the British economy’s inflationary tendencies, leading to the collapse of the Heath Conservative government of 1970-74 and the Wilson-Callaghan Labour government of 1974-79.

But deliberately choosing to cause harm to the economy and society is something else. And that is what is coming unless the country has a chance to think again, the only feasible route being another referendum – the second or third, depending how you score the 1975 referendum which confirmed our original membership.

There is no shortage of speculation about what Johnson and his cohorts are up to – and I did not get where I am today by trying to read politicians’ minds. There are those who say that Johnson is at heart a Remainer, and is going through the motions of pretending to believe in Brexit until it becomes obvious that it is nonsense and normal service can be resumed. But perhaps he really is deluded and believes that a period of “optimism” – after the period of low spirits, even depression, fomented largely by him and his Brexit like – can work miracles.

There is only one macroeconomic sphere in which I agree with him. After a long period of needless austerity, the economy needs more expansionary, Keynesian policies. However, focusing tax cuts on the rich is not the right way to cure the many ills of contemporary society.