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Boris Johnson’s Fantasies Fell Before U.K. Economic Realities

by Abhinav Chaturvedi The U.K. has been riding a socioeconomic rollercoaster over the past 3 and half years, battling with the myriad controversies of Brexit, coronavirus lockdowns, the conflict between Ukraine and Russia, all contributing to a febrile political atmosphere. Amidst all of this tension, it was perhaps inevitable that someone would have to take […]

Photo by Andrew Parsons 10 Downing Street

by Abhinav Chaturvedi

The U.K. has been riding a socioeconomic rollercoaster over the past 3 and half years, battling with the myriad controversies of Brexit, coronavirus lockdowns, the conflict between Ukraine and Russia, all contributing to a febrile political atmosphere.

Amidst all of this tension, it was perhaps inevitable that someone would have to take the fall, and that someone ended up being Prime Minister Boris Johnson, who eresigned after one scandal too many led to 59 government resignations within roughly 40 hours.

His own MPs’ condescension was palpable when Tory members elected him as their party’s leader in 2019. They knew he was a serial liar and adulterer who had previously been sacked from the Times for false reporting. They calculated, however, that he would win votes from many who were not traditional Conservatives but saw him as an engaging leader.

Despite winning in a colossal landslide in December 2019, a smorgasbord of inane propaganda, polarising migration policies, blatant violations of coronavirus rules imposed by Johnson himself, and institutionalised lying gradually alienated all but his most ardent supporters.

What does this mean for the U.K. economy?

Brexiteers insisted that coming out of the EU would bring back the glorious prosperity that UK enjoyed as a global hub of free trade and commerce, revitalising the country’s financial services and tourism industries. A trade deal with the United States would unite the Anglosphere and ensure lower prices for British consumers. Although differences emerged between the vision of Johnson and his “Red Wall” supporters, who aimed to use Brexit to “level up” poorer regions via state aid and the “Singapore-Upon-Thames” Thatcherite Brexiteers, both visions demanded a hard break from EU rules.

A full-throated Brexit has nonetheless crashed on the rocks of the Northern Ireland Protocol. Trump, who endorsed Brexit and supported a trade deal, was replaced with Democrats who considered Brexit a disaster. The octogenarian leadership of the party, including President Biden and House Speaker Nancy Pelosi, invoked the fading spectre of a U.S. interest in Ireland and the need to protect the Good Friday Agreement to reject a U.K. trade agreement. At the same time, as long as the protocol is in place in its current form, the entire U.K. cannot fully break with the EU, leaving the country between a rock and a hard place.

Regardless of who is elected to take Johnson’s place, the U.K. will continue to strongly back Ukraine in its struggle against Vladimir Putin’s occupying forces. This gives it a degree of support in Washington, but could lead to tensions with the EU as the bloc may turn to a settlement with Russia if Putin stops supplying Germany with natural gas.

The macroeconomic situation is dire. May saw inflation reach a fresh 40-year high of 9.1 percent as the nation’s cost-of-living crisis was exacerbated by skyrocketing food and energy prices.

The U.K. is anticipated to enter a technical recession in the second half of the year, and the unexpected contraction in the economy in April marked the first consecutive GDP reductions since the start of the pandemic. As household spending power continues to be constrained, the Office for Budget Responsibility, the UK’s independent fiscal watchdog, forecasts that real disposable incomes would shrink by 2.2 percent this fiscal year (2022/2023), the most significant yearly decline since records have been kept.

Since Boris Johnson submitted to pressure and left his position as Conservative leader, the pound has at least increased from its lowest point in more than two years. On Thursday, investors welcomed a brief relief from the UK’s political crisis as sterling climbed back above the $1.20 level. The pound sterling and UK gilts’ initial reactions show that markets are generally adjusting to the adjustment favourably.

The employment situation is also shaky, especially in unskilled positions.The Office for National Statistics (ONS) can gain comprehensive insights into the workplace across the nation using the Labour Force Survey of 40,000 homes. The employment rate in the UK was 75.6 percent (more than 32.7 million employees) between February and April 2022, according to the most recent official statistics.

Although this was an increase of 0.2 percent from the previous quarter, it was still 366,000 workers or 0.9 percent below the levels seen before the pandemic.

Despite its public prominence and near-dictatorial powers in the events of a large Commons majority, the position of prime minister is relatively weak once its occupant loses the support of the rest of his or her MPs. Johnson made the error of assuming his 80-seat theoretical majority meant he could govern with impunity and lead the U.K. into a fantasy utopia, ignoring the outside world. But such arrogance was certain to meet its demise.

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