Markets Have Taken Back: So Much for the Sovereignty of Brexit Gears Illusion | Jonathan Friedland

hI’d like to believe now, when we’re in the middle of a storm, but someday that’ll also be a thing of the past. And when that’s the case, when we get out of the hourly psychological drama – no longer staring at the screen, we watch Kwasi Kwarteng’s plane actually spin through the sky on its way to is being kicked out Upon landing, for the offense of doing what his boss wanted him to do – it might not seem that complicated.

Historians will look back and see a point of origin for the current madness, one that explains how a new prime minister could see her administration collapse in a matter of weeks, even if we struggle to call it that out loud now. When future books come into our classroom, in the fall of 2022, they will begin with the summer of 2016: Britain’s exit from the European Union And the exact delusion that drove it.

They will point to the apparent impact of Britain’s decision to leave the European Union, and the role it played in the heart of a country once famous for its stability. They might start with the basics. Coming out, they will write, the UK economy has shrunk thanks to a 5.2% decrease in GDPAnd the A 13.7% drop in investment and a similar drop in commodity trading. This subjective deflation helps explain why Britain feels the international shocks – rising inflation, for example – harder than most. If your economy is smaller, you have to either tax people more to pay for the services they expect, cut those services, or borrow. There are no other ways out.

Unless you resort to magical thinking. Which brings us to the second causal link between Mad Now and the turning point of 2016. Brexit broke the link between governance and reason, between politics and evidence. Until Brexit, politicians rarely escape challenging empirical facts or basic logic. But they pretended in 2016 that a country could weaken its trade relations with its closest neighbors and get richer, which is like saying you can get into a basin of ice and warm up. Once the taboo on magical thinking was broken, once the imagination became a conservative habit, gables became inevitable—smiling insisting that you could cut taxes on the richest, and make Absolutely no discounts on public services And controlling borrowing, all at the same time.

But there is a less obvious way that Brexit made the current great meltdown a predictable political death. He conveys the idea that has fueled the desire to leave the European Union more than any other: he calls it the illusion of sovereignty.

The mantra of those who quit work, “take back control,” urged the British to break free from the shackles of Brussels and become a sovereign and proud nation again – a nation that would single-handedly decide its fate. After Brexit, they promised that Britain would be the sole controller of its own destiny, unencumbered by the need to consult or even accommodate anyone else.

The three weeks since Kwarteng Turn in his mini budget They saw this illusion shatter. For Truss and her now former advisor, they were rudely reminded that in our interconnected world there is no such thing as pure, unfettered sovereignty. No government can do whatever it wants, regardless of others. In this case, the limitation on sovereignty was not the European Union: it was the money markets. But their judgment was as binding as any decree in Brussels. In fact it was more than that. They ordered the dismissal of the chancellor after only 38 days in office and canceling the government’s economic strategy. It is the financial markets that have regained control.

None of these events should come as a surprise. There have been many who have warned that this is going to happen, not least among them is Truss’ summertime opponent, Rishi Sunak. But Truss and Quarting went ahead anyway, issuing their statements as if they were the only actors on stage, ignoring the fact that you can’t announce an unfunded £43bn tax cut without those you expect to lend you the money. point of view – in this case by causing an immediate rise in the cost of borrowing. You cannot simply bypass the official expenditure auditor, the Office of Budget Responsibility, without the markets concluding that you have become an unpredictable, and therefore unreliable, bad risk.

As the rest of us scoffed at pointing out six long years ago, there is no such thing as unrestrained sovereignty in the twenty-first century: every nation has to accommodate its neighbors, the global economy, and reality. But leavers and cogs of ardent fanatics refused to hear it. When Sunak attempted to clarify these primal truths, members of the Conservative Party thought he was a spoiler. The permanent Secretary of the Treasury, Tom Scholar, was seen as the embodiment of such boring, fact-based thinking, and so Truss fired it.

This week Sanjay Raja, chief UK economist at Deutsche Bank, before the public committee That Britain was facing a unique form of trade shock: “We haven’t had this kind of trade deficit since 1955, since the national accounts records began.” It was strange, because I too was thinking of the mid-fifties of the last century, specifically the Suez Crisis of 1956. The failure of that military adventure is now seen as the moment when a bucket of cold reality was thrown on Britain’s face, a humiliation that stripped the country of imperial illusions, This forced her to accept that she was no longer a global superpower that could act on her own. For a while, Britain learned this lesson: Just five years after Suez, the country was knocking on Europe’s door, asking to join the club.

But some, particularly in the Conservative Party, have never disregarded the old delusion. By 2016, the Conservatives, speaking of Brexit, were back of a global Britain once again navigating the world’s oceans, freed from the restrictive grip of the European Union, and ready to return to its legitimate greatness. Conservatives have been breathing these fumes for six years, and the miniature result of Truss-Quarting’s budget: Suez for Economic Policy is a disastrous act of an imagined imperial lord.

As noted by many economists, Truss was behaving as if Britain was the United States, the exporter of Reserve currency in the world, with markets collapsing on themselves to lend it money. Like Anthony Eden before her, she could not accept that Britain’s place was not what it was: she could not be as sovereign as a king in a fairy tale, capable of bending the world to his will. This kind of sovereignty has always been an illusion, fueling and nourishing Brexit.

Now she had to make a concession to reality, put down the political life of her friend and give up what was a privileged policy. She is not responsible for the events. It is not even responsible for its own government. Jeremy Hunt had a date that forced her. Her behavior at her Friday afternoon press conference – shocked and shaky – indicated that she had not grasped the full meaning of what had just happened.

It’s over, hollow shell of the prime minister. But this is more than that. The Brexit bubble has burst. The country saw that the Conservative Party’s hallucination of an island capable of controlling the tides was nothing more than a fever dream, and dangerous at the time. We can declare the Trussonomics dead. Bringing up today we can say the same delusion that he generated.

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