Utopia met reality in Britain’s referendum. Reality won. Since then, markets have been in disarray. It is now certain that the UK will fall back into recession and take Europe with it. The resetting of Britain’s role within Europe will take years and, during the wait, there is wisdom in the old adage – do not try to catch a falling knife.
One of the reasons for the unexpected result was that this is also the high tide of globalisation. The 10 per cent of the elite who have benefited from this are unconscious of the 90 per cent who have suffered.
Over the past decade, the number of working poor households in the UK has increased by more than 2m – a 25 per cent increase in the rate since 2000. The official definition of ‘absolute poverty’ is for those in households with less than 60 per cent of median income, and is generally calculated after housing costs of mortgage payments or rent.
Quantitative easing (QE) has allowed politicians to avoid the pains of real reform by ensuring that the working classes pay it. QE has done nothing for economic growth, but has been marvellous for asset prices.
House prices have risen by more than 10 per cent in real terms over the past decade – by more than 50 per cent in London. The average London tenant pays a third of their disposable income on rent, compared with a quarter one decade ago.
Also full-time – let alone well-paid – jobs are scarce. At the lower end of the skill range, all too many workers are forced onto zero-hour contracts, or can obtain only part-time jobs. Large companies have made uncontrolled immigration worse by recruiting and importing company-wide workforces from Eastern Europe and paying them well below local wages.
So apart from housing shortages, school-place worries, and pressure on local surgeries and hospitals, 90 per cent of English and Welsh workers have had real cause for concern.
Yet senior Westminster politicians, faced with such worries from voters on their referendum campaign, were at best patronising and at worst oblivious. As always throughout English history, workers reacted by turning against the elites, just as they are doing in the US with their support for Donald Trump.
To Brexit or not?
Eurocrats and continental politicians are urging Britain to trigger Article 50 of the Lisbon Treaty and so formally start the presumed two-year exit of EU laws and obligations. They have reason to be nervous: it is not only English voters who are capable of seeing that European parliaments and institutions are full of hard-faced men who have done well out of globalisation.
Discontent is growing because the EU has produced only economic stagnation, youth unemployment and political stasis since the banking crisis.
The longer the Brexit crisis lasts, the greater the threat to European financial stability. Since 2006, and the opening of the banking crisis, the ratio of European government debt to GDP has grown from an average of less than 70 per cent to more than 90 per cent (except for Italy at 135 per cent).
With no economic growth worth the name, these debts will continue to grow. But the problem is worse than that.