The British government’s handling of Brexit is the “greatest failure of our political system in any of our lifetimes,” according to veteran journalist Robert Peston.
ITV political editor Peston, who was speaking last week to UK fund selectors at sister publication Portfolio Adviser’s Spring Congress, said it was still not clear what kind of Brexit will occur or whether there would be any Brexit at all.
In dramatic developments this week, the European Council agreed to delay Brexit until May 22 if Prime Minister Theresa May’s Withdrawal Agreement is approved by MPs at the third time of asking. If the deal is not approved, the European Council says an extension until April 12 will apply
“We have a British prime minister who cannot enforce the basic rules of government which is there is collective cabinet responsibility. This is extraordinary, we have never lived through chaos like this, Peston (pictured) said.
Markets underestimate no deal
Peston said markets have been massively underestimating the risk of a no-deal Brexit simply because of the complexity of getting any scenario that follows through Parliament, whether that is May’s deal, another deal, a delay, or another referendum.
The former BBC business editor said the most likely scenario remained a no deal Brexit on April 12.
He added: “I would say as a proud nation there is something absolutely shocking about the most important decision of this, or any, generation being taken because a bunch of MPs who previously thought her deal was utterly shit, now think utterly shit is better than the alternative. That is not a rational base to decide the fundamental economic and security relationships of this country.”
Scarier than the banking crisis
Peston also described Brexit as “much scarier” than the banking crisis which exploded in 2007.
“The problem with where we are now is it is infinitely more unpredictable. I’m not arguing the economic shock of the worst type of Brexit will be as bad as what happened towards the end of 2008, although it could be.”
Explaining the reasons for Brexit, he said it was the result of millions of people being disillusioned with the establishment because of a culmination of working-class earnings stagnating, the growing productivity gap between parts of the UK, and the introduction of quantitative easing. Central banks saw the latter as the solution to the financial crisis, but it only served to make the rich richer because they owned all the assets that appreciated as a result, he added.
These events drew together the “strangest coalition in history” which comprised two groups of people: those who would have always voted to leave the EU and who tended to be older, property owning and not living in the big cities; and those on lower incomes or unemployed living in social housing.
“They still voted for Brexit because for years people had been ignoring their voices, they were telling everyone this place was not being run for them.”
He added: “One of the things that really fills me with despair is almost whatever the outcome, there will be a heavy price for this mismanagement. When we stand back from this we will look at the way we have made decisions and we will realise quite how inept we have been. There is no benign, risk-free outcome here.”
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