The Dickensian repercussions of Britain’s decision to leave the EU

There’s something Dickensian about the contrasting approaches of the Irish and British governments to the Brexit crisis. Remember Dickens’s opening line from A Tale of Two Cities, a collage of stories from London and Paris in the 1770s?

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”

I can’t stop thinking about this line since I started reading the book to my sons recently. Dickens’s book is really about how ordinary things change after an extraordinary event. In his case it’s the French Revolution, which overthrew a monarchy to establish a republic. In our case it’s the potential dissolution of the European Union and the weakening of one of Ireland’s largest trading partners. Somehow in its universality Dickens’s line speaks to the kind of large structural change we’re seeing post-Brexit.

It was the best of times

The financial markets have been battered since June 24. The Ftse 100 index of very large multinational firms, which benefit from the incredibly weak sterling level, is up €30 billion. British exporters have seen huge increases in demand for their newly-cheap products. Some currency speculators made out like bandits, and anyone holding gold is feeling very smug indeed. Little Englanders and euro-sceptics are triumphant. This is their moment.

It was the worst of times

The Ftse 250 index has lost €38 billion in value. The Eurostoxx banks index, which tracks the 30 largest banks in the eurozone, has lost over €110 billion.

Over half of the £25 billion Investment Association property sector has now suspended trading, with five of the largest British property funds suspending any redemptions. Companies importing products have been hammered and are issuing negative profit guidance, especially airlines such as EasyJet and Ryanair.

Employers cut almost 800,000 job ads following the result in order to compensate, somehow for austerity. Local authorities and city councils across Britain have to prepare to lose large percentages of their budgets, bringing in austerity measures for those who need government services the most.

In England, the EU funds more than £5 billion. In Wales they’ll lose almost £2 billion, and in the North, they’ll lose almost £400 million. Scotland will lose over £700 million. Here, Minister for Finance Michael Noonan revised down his estimates of Irish GDP growth from 4.3 per cent to 3.4 per cent, and while insisting the figures for Budget 2017 were sound, he admitted the future of the Irish economy was now more uncertain.

Ireland’s fortunes depend on the ultimate form the Brexit takes. Whether it’s a Norway-style or a World Trade Organisation-style deal matters hugely to us.

It was the age of wisdom

Bank of England governor Mark Carney earned every penny of his £800,000 salary. Carney has given three major briefings since the Brexit result on June 24, each one more commanding than the last. Without a functioning government or opposition, the governor is the de facto leader of the British response to Brexit, and even he admits pulling the bank’s monetary policy levers will probably not be sufficient to avoid a period of uncertainty and recession.

It was the age of foolishness

Each of the main protagonists of Brexit has now walked off the pitch. Boris Johnson, Michael Gove, David Cameron, Nigel Farage. Each of these men has caused his own share of the problems that will afflict Britain, Ireland, the EU and the world for decades. Whatever their individual talents, their collective foolishness will not be forgotten by history. And history is what they all are.

It was the epoch of belief

Many Irish commentators are seizing the uncertainty of Brexit as an opportunity for Ireland to increase its flow of inward foreign direct investment, especially if Britain gains a Norway-style in/out, free trade agreement.

This is the positive belief that the potential costs of Brexit in trade are swamped by the potential benefits in increased inflows of cash.

As I wrote last week, I’m not convinced of this case, but I’m willing to keep an open mind. Those 17 million people who voted to leave voted for 17 million reasons.

It’s not for me to try to explain the reasons behind their choices, but it certainly had something to do with a deeply held belief in a reassertion of sovereignty. This reassertion may not take place through the Brexit negotiation phase.

The protracted nature of these negotiations – if they are ever triggered – may give time to let the British people understand the benefits of being within a free trade area, while also managing somehow starting to solve the problems the referendum result threw up. These problems could have been solved, arguably, by less austerity and more capital spending in areas left behind in recent decades, but that won’t be the solution in the future as a diminished Britain fights to retain its transfers to its regions.

It was the epoch of incredulity

Very few people seemed to believe the Irish government’s initial assertion on the morning after the Brexit result that everything was going to be grand, and that they had a plan. Yet their plan is reasonably sound, even if their assurances on the state’s finances are highly contingent after 2017. What the Irish government can influence, it will influence, but the systems within official Ireland will need to adapt rapidly to whatever trade deal looks like emerging.

Meanwhile, in Britain, the shock at the lack of a plan post-Brexit by the mandarins of the Treasury and the Cabinet Office is now subsiding, and all await the results of the Tory leadership election to see which way the plan might be developed. No one believes the front-runner for that contest, Theresa May, actually wants Britain to leave the EU, despite her campaigning on the result, and their are questions over the CV of Andrea Leadsom, the other challenger.

It was the season of light, it was the season of darkness

The Labour and Conservative parties have collapsed and are fractured by the Brexit result. These two parties have monopolised power for 100 years in Britain. That may change now. The post-Brexit results have seen large increases in race and religion-related incidents in Britain. The Metropolitan Police has recorded three race hate crimes every hour since the referendum result was announced.

It was the spring of hope, it was the winter of despair

The hope is that Britain will negotiate a trade deal that is very similar to the one it already has. The facts are that it will take whatever deal a belligerent EU chooses to give it and call that a success. It may be years before we understand the true impact of the Brexit vote, but it is a vote for a smaller, poorer, less influential Britain.

The discussion on soft and hard borders between the Republic and the North of Ireland, not to mention the altered relationship between the EU, Ireland and Britain, the failure to launch of the all-island North-South Brexit forum, are all causes for despair, after more than 40 years of trying to make the movement of people, goods and services and capital as frictionless as possible.

There is a large contrast between the reactions of the Irish and British governments. Ireland has at least the outlines of a plan and is adopting a watching stance, though now everything is contingent on the form of trade deal Britain strikes with the EU. Britain has effectively no plan, and the four nations that make up the United Kingdom have differing priorities.

For example, when it really dawns on the farmers of the North that the CAP is going bye-bye, when trucks are stopped on their way into Newry, and when the little Englanders’ pet passports aren’t accepted on the way to their Spanish holiday homes any more, the realities of the Brexit result will become apparent.

Dickens’s opening line ends with “we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way”. That’s about the sum of where we are with Brexit.