Macroscope | Whether it’s Brexit or Bremain, the UK is in long-term economic decline

UK investors face some tough choices ahead – either Brexit happens badly, well or not at all. While Britain slumps into deep Brexit gloom, UK equity markets are still surprisingly upbeat. Markets may be sensing Brexit is never going to happen, given the impossible odds stacking up against the UK ever striking an acceptable exit deal with Europe. If so, forget about Brexit, it is Bremain – or Britain remaining in the European Union – which investors need to fear.

Either way, the outlook is grim. With or without Brexit, Britain is still an ailing industrial nation. So any short-term relief about Bremain must be blunted by the reality that Britain is stuck in the grip of longer-term economic decline. The shock Brexit vote two years ago simply accelerated the process. The jolt to confidence has ripped a big hole in investment and spending, and started unravelling many of the lifelines propping up the economy. Britain may never fully recover.

Britain is sliding into Brexit disarray. Politicians have never seemed further from any sort of reasonable political, economic or social accord. The nation is deeply divided, with voters growing more unsettled about an increasingly uncertain future outside Europe. More worrying, there is no consensus within Britain’s mainstream political parties on how to strike a workable deal on the single market, customs union or the highly contentious border issue with Ireland.

The Conservative government could be close to imploding, while the Labour opposition is on standby for a snap election at any time. A sudden election at this juncture would be fruitless. Labour is in as much of a mess over Europe as the government. Meanwhile, UK Prime Minister Theresa May’s recent suggestion of a seven-year transition period for the British exit simply kicks the can further down the road of political procrastination.