Brexit has become a distraction from bigger issues

The Brexit debate drones on, the government seems to have been hanging on by a thread for months, and I fear it is becoming a distraction from other issues.

Article updated: 24 October 2018 8:00am Author: Michael Baxter

Actually, the Brexit debate drones on, and on and on. The views held by many politicians are so polarized that there no longer appears to be a middle ground — it’s one extreme or the other. And yet, I suspect that most of the public hold a view that occupies that very middle ground.

Transition period needs to be much longer

18 months or so ago, the former Greek finance minister Yanis Varoufakis went around telling anyone who would listen that the UK needed a much longer transition period — say five years. His proposal led to outrage — FIVE YEARS! The problem is that the Brexit debate has never been either sensible or fact based. There is too much emotion on this one. Daniel Kahneman says there are two ways of thinking: fast and slow. Fast is instinctive and emotion led. Slow is logical and analytical. But, he argued, fast thinking is often dominant, slow thinking is often applied to try and logically justify what we had already decided to do.

In the Brexit debate, like so much of politics worldwide, facts count for very little. But it seems to me that the public discourse is getting worse — certain newspapers bombard us with one sided political propaganda — and even if we divide what they say by two, we still end up with a distorted and exaggerated view of reality.

Some blame the internet and social media for creating echo chambers, I blame a traditional media that has responded to the threat posed by the internet by becoming shrill voices for extremism.

Senior politicians have always acted like kids in a playground, now they take on the persona of toddlers at a crèche.

Politically speaking, we live in dangerous times.

Economically speaking, I fret. I see suicidal policies concerning the economy wherever I look. But facts count for nothing. If a US President imposes policies that have ‘inflationary’ written all over them in large block capital letters, he blames the central bank for increasing interest rates too fast, or indeed too high.

But then central banks are run by experts, and in the era of post facts/post truth, we have had quite enough of experts. The Fed is killing the US economy, Mark Carney is Project Fear’s stooge. I wonder what next. Will a doctor who diagnoses you with a nasty but curable disease if you only act fast enough, also be dismissed as selling project fear?

Of course Varoufakis was right. It takes years to negotiate a trade deal, it was always going to take years for the UK to negotiate a sensible exit.

No deal nonsense

I read that when you are negotiating, you always need to be willing to walk away — the no deal option is a strong negotiating tool. Really? Can the people who make this argument not see the fatal flaw? The no deal option means the two sides walk away as before, nothing has changed. The UK’s same as before option is remaining in the EU.

Others say that countries which are not in the EU are doing just fine, as if that argument has any relevance. The UK cannot reverse 40-odd years of EU membership overnight, over a year or even over two years.


I have expressed my view on whether there should be a second referendum here before. What puzzles me is this: we know that a lot of voters in the referendum were undecided until the last minute. Some of these voters may have been swayed by the now discredited claim that the ‘EU needs us more than we need it’, that negotiating with the EU will be easy — that post Brexit we can have our cake and eat it. I don’t know what those floating voters now think, but I suspect many have changed their mind.

Imagine you ask two elderly but sensitive aunts who you love very dearly, what they want to do ‘tomorrow’ as you have some free time. They reply that they fancy the cinema. Then the next day you check to see what’s on but discover there are just two films being shown: Reservoir Dogs and Texas Chainsaw Massacre. Do you say to your elderly, sensitive aunts who you love very dearly: “You have exercised your democratic right, and I will carry it out, come what may? Or do you say: “Do you still want to go to the cinema?

Bigger issues

But the world seems to have become more terrifying. The F word — F for fascism — has crept back into politics. Saudi’s human rights records have always been awful, but pragmatic business brains chose to ignore this, now the awfulness of this regime has been brought to the public’s attention and it is truly shocking. Iran may or may not be any better, but at least it is reforming and at least the West should appreciate that much of the antagonism it has, has its roots in the days of the Shah. But the US would rather work with Saudi than Iran and that is that.

End of dollar hegemony

Yet I read that the US dollar may be losing its dominance. European countries that want to buy Iranian oil may have to create a non-dollar backed form of buying oil. Russia wants an alternative to dollars.

What do investors do in such times?

The real hope — and indeed threat — to the global economy lies with technology. Whether it is AI, the Internet of Things, or Lithium ion batteries, or indeed CRISPR.

South East Asia and China is where these technologies are being embraced the most — and if the UK does, bizarrely, join the Trans Pacific Partnership, good. But it is no coincidence that Dyson is going to have its electric car made in Singapore.
Invest in techs that get AI, invest in countries that are embracing AI. That is the best hedge against political chaos, of which Brexit is one tiny bit.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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