Industrial strategy failures increase the likelihood of soft Brexit

In many ways, 2016 was a fairly typical year in post-crisis Britain. The economy continued to stumble along, but the government continued to pretend otherwise, declaring austerity to have prefaced a new age of prosperity, making Britain the envy of the developed world.

But sluggish wage growth and increasing precariousness within the labour market tell the real story. Productivity is stagnant, living standards are declining, inequality is intensifying, and the Exchequer is unable to raise enough tax revenue to maintain much-needed investment in our public services.

Great economies do not decline overnight. Britain remains a stronger economy than most, but it has been in relative decline for at least a century. While there was no economic news in 2016 to suggest this historical process might be about to go into reverse, the heightened pace of decline evident since the 2008 financial crisis probably did slow a little, or more precisely, continued the decelerated pace of decline evident since around 2013.

We now know that this deceleration was far too little and far too late, because 2016 was also the year when Britain’s economic pathologies, even as they arguably began to abate, manifest in enormous political upheaval. 23 June 2016 will surely prove to be a decisive historical milestone, and like all such cleavages, was both largely unpredictable yet entirely explicable. Most of us may not have seen it coming, but imagining now a world where Leave didn’t win is impossible.

But as far as 2017 is concerned, the Brexit vote was an inconclusive one. There were essentially two very different, almost contradictory, Brexit votes.

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