As we are about to hear again that there has been insufficient progress in the talks between Britain and the European Union, it becomes clearer that there never can be enough progress. The Brexit that Britain seeks simply does not exist.
Tolstoy’s famous quote about unhappy families offers a very good explanation as to why: “All happy families are alike; each unhappy family is unhappy in its own way.”
As if we didn’t know already, last week we got another reminder of the economic disaster that Brexit is shaping up to be: Retail sales weakened in the UK, as price rises eat into consumers’ purchasing power.
The excitement that had been building up before the Florence speech of UK Prime Minister Theresa May is quickly turning into disappointment. Many had expected the Prime Minister to find a way to unblock the stalled negotiations over Brexit, but the speech, as delivered, was far from achieving that.
I know I have said it before, but at the time it was just a hunch: the price to pay for an “un-cool Britannia” after Brexit will be steep. Evidence for this is beginning to show. A survey released recently shows how fast Britain is losing attractiveness in the eyes of the world.
The Bank of England has reason to pat itself on the back. During the financial crisis of 2007-2009, things could have taken a very ugly turn if it hadn’t cut interest rates to record lows and hadn’t started printing money.
A recent article in Politico says that some European Union policymakers believe that Brexit negotiations are so chaotic on the British side because of a cunning plot to swamp the EU with well-prepared, profoundly thought-out position papers at the last minute.
“Having seen the movie ‘Dunkirk’ over the weekend, history might suggest that the British could turn disaster and disorganization around,” it quotes an European official as saying.
The Bank of England will publish its inflation report next Thursday, and this time it will get even more attention than usual.
Brexit is being felt in prices more and more now, with the cost of grocery bills jumping and prices for essentials going up. The phenomenon of “shrinkflation” is in full swing as well; many products are mysteriously losing weight, but maintain their price.
No matter how much it would like to help (or to meet its inflation target), the Bank of England cannot do anything to prevent prices from rising. In fact, to be more accurate, it could, but it will not. The central bank could raise interest rates, stopping the pound’s depreciation — but if it does this, the housing market would crash.
The UK’s negotiations with the European Union started with a proposal regarding the status of EU citizens in Britain after the country leaves the EU. One particular point in the proposal gives a flavour of things to come. It should worry anyone, not just EU citizens.
What a spectacular lesson the first half of the year delivered for investors. At the beginning of the year, it looked like the UK’s vote to leave the European Union was a great idea: the eurozone seemed on the brink of disintegration.