2019 03 – The Economy And Brexit

The Economy And The Brexit Effect

Eamon Dyas

Some weeks ago at the start of the most recent Westminster “meaningful vote” circus Evan Davis had two people on his Five PM radio programme. The chap who was arguing against Brexit had all his economic ducks lined up to back his arguments and convincing they were too. I can’t recall the name of the woman who was making the Brexit argument but her point was that the main mistake of the pro-EU side was that they only viewed the issue as one of economics. Her argument was that the vote for Brexit had nothing to do with economics but was one of fear. The British have had a congenital fear of losing control of their “green and pleasant land” for many years now and they viewed the influence of the EU on their culture and institutions as increasingly toxic.

I wouldn’t necessarily agree with economics being an absent element in the pro-Brexit vote. Or, indeed that fear does not have an economic component. It all depends on what economics is being referred to. The small business and sole trader trying to make a living and being undercut by immigrant labour, in many cases living in shared hovels and prepared to tolerate wages and living conditions far below what the indigenous population expects, no doubt poses an economic threat to this element of the indigenous population and that threat undoubtedly generates a feeling of fear.

Traditionally the part of the indigenous population that has been directly impacted by cheap immigrant labour have been the sole-traders and very small operations around things like plastering, plumbing, gardening, double-glazing installers, roofers etc. The extent to which these small operations and sole-traders exist in the economy has grown in direct proportion to the shedding of labour by the big operators and the perspectives of these “shedded” people is determined by their experience in trying to make a living. But there has also been a recent expression of the fetish to facilitate the financial sector which has had the effect of broadening the sentiment previously shared by the sole and small trader. The real issue for the British economy is the way in which the property sector has dominated investment for decades. This has not only diverted investment away from manufacturing but it has had a positively destructive effect on small businesses.

The small spray-painting workshops, glaziers, furniture-makers, welding workshops etc. have all suffered significantly as successive government polices continued to underpin the financial/property bandwagon. I saw it in direct operation about ten years ago when a local garage in New Cross owned by an aging mechanic named Arthur ended up being demolished and is now a block of flats. We knew Arthur for decades. What he didn’t know about cars wasn’t worth knowing and represented the best of those Englishmen who retained a sense of fair play and duty to the extent that it was to Arthur that the women in the area went to when they had problems with their cars.

Arthur had three men working for him and an apprentice but he was getting too old for the work and his dodgy knee was getting worse. He finally decided to call it a day but he wanted to make sure that his “lads” were ok after he retired. He owned the free-hold to the site on which his garage stood and he offered the business to his staff at a knock-down rate. He even helped them formulate a business plan for them to present to the banks. But the banks didn’t want anything to do with it. They blackballed the garage hands and their efforts to finance Arthur’s buyout. They did this in the full knowledge that Arthur’s garage was on a prime piece of real estate. The financial strangulation of any use of the site for a garage made absolute sense in the world of the financiers. Without his ability to sell the site to the garage hands Arthur was compelled to put it on open sale and of course as everyone knew would happen, it was quickly snapped up by a property developer. The property developer then went to the bank for a much larger loan than was originally asked by the garage hands in order to cover the development costs and the banks were only too willing to facilitate this.

Within the past year the highly remunerative railway arches owned by Network Rail and which housed thousands of small business in London have been sold to a hedge fund manager and the first thing they plan to do is to “improve the workspaces” with a view to upping the rent. The plight of small business and sole-traders in London is dire. Because of the extortionate rents they cannot afford the conventional commercial spaces and the railway arches offered a cheap and accessible option. It’s not as if Network Rail were not already making a significant profit from the renting of their arches – they made millions each year – but the government wanted the quick burst of cash that their sale provided and so the plight of the small business became secondary.

Only in the last six months there has been another local event that shows the way in which corporate interests are facilitated in a way that over-rides the small man. Within a couple of hundred yards there is a Wicks DIY store and the carpark has always had a tea-hut which offered tea/coffee/sandwiches to the Wicks’ customers (mostly small-scale workmen) who were using the store. Seeing how popular the tea-hut was, the management of Wicks decided to cash in and offered the site to Costa Coffee who promptly built a “drive-through” facility in the car park and the chap who ran the tea-hut for decades was turfed out.

There is a myriad of such instances happening every day affecting many, many, people but it does not command the attention of the media and a local garage forced to close is not exactly headline news. There are economic arguments and then there are economic arguments and there are arguments about fear but there is a hidden reality out there that nobody seems to notice but which had its day in the referendum of 2016.