David Frost is right about Brexit – but not for the reason you think

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David Frost is right. On Monday (November 22), the de facto government secretary for Brexit gave an intriguing speech warning that the UK will not prosper after Brexit if it simply tries to act like a member of the European Union: The UK’s current economic model assumes membership in the European Economic Area and the Customs Union, and it won’t work very well since we left both.

But he is almost certainly wrong in his preferred answer: lower taxes and a smaller government. I’m not saying that these things cannot work in theory: I really don’t think it’s worth giving much space to this issue, because in practice you are faced with very real political constraints that make it harder for conservatives to continue downsizing since 2015. of the year.

[see also: Treasury grandee Nick Macpherson: “The idea that Brexit has liberalised trade is just nonsense”]

Although the 2015 general election was a political victory for the Tory party, which won its first parliamentary majority since 1992, the ruling parties collectively lost both seats and a share of the vote. A year later, the defeat in the Brexit referendum brought an abrupt end to the careers and political agendas of many key players in that government. In 2017, when the Conservatives returned to the country promising to continue the cuts, they lost their parliamentary majority. The 2019 election result was driven by many things – Jeremy Corbyn’s unpopularity, the desire to leave the country behind Brexit, and more – but it also helped that the Conservatives did a good job of making it seem, at least, that the era is increasingly deep cuts have come to an end.

If you want to be radical about cutting taxes, you must also be radical about cutting costs. Whether you believe, like Rishi Sunak and Rachel Reeves, that spending ultimately has to be paid for by taxes, or believe that the only real constraint on government spending is inflation, you need some degree of interconnection between what you do. from the side of expenses and from the side of taxes.

One hard truth for Brexit supporters who think the path to UK prosperity after Brexit is to reject European model passion of the British electorate for what can be called European way of life – a certain standard of public services, a broadly social democratic approach, a mixed economy and so on – preceded our membership in the EU. In many ways, the balance between British voters’ expectations and good economic management is one of the reasons why British politicians chose to seek membership in the nascent European Union in the 1960s and 1970s. In terms of weaning the British electorate away from aspects of the European model, the most successful period for the British right since the advent of universal suffrage came during our EU membership in the 1980s and 1990s.

There is no compelling evidence that the British electorate is willing or willing to support the levels of spending cuts needed to make a big difference in UK taxation, unless you make some pretty heroic assumptions about growth and tax revenues. So while Frost is correct that the United Kingdom will fight if it wants to keep the European model outside of the European project, it is far from clear whether a low-tax alternative is possible at all.

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[see also: Kevin Rudd: “China views the UK as weaker after Brexit”]

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