Ian McConnell: Tories take leaf out of Bart Simpson’s book for their Brexit homework

This week, senior City figures and Treasury Committee chair Nicky Morgan expressed concern following a signal from the UK Government that it may never publish a position paper on the post-Brexit future of the UK financial services sector. Senior financiers have said they were told after the summer that the UK Government would issue such a paper, setting out negotiating priorities for this key sector.

However, the Department for Exiting the European Union this week declined to say whether any such paper would ever be published.

“We will keep under review what is the best way of advocating our position – be that in private discussions with the EU, speeches, or a formal position paper,” a spokesperson said.

It certainly seems much of what businesses and the population at large were expecting from the UK Government, in terms of clarification of what on earth it hopes to achieve through Brexit, has not materialised. Rather we have had plenty of rhetoric, which has often had negative rather than just zero value because it has been so full of mixed messages from senior members of a Conservative Government who are singing from different hymn sheets.

It is worthwhile, in this context, to return to Confederation of British Industry director-general Carolyn Fairbairn’s year-end letter to members, in which she described 2017 as a “rollercoaster ride, full of jaw-dropping twists and turns”.

Calling for binding Brexit transition terms by the end of the first quarter and progress on a framework for a final deal that delivers “barrier-free trade with the EU”, Ms Fairbairn wrote: “From our politicians we need unity, clarity and certainty, not a different opinion every day. Politics will need to work on business timescales if we are to get the right result for the country.”

This point about not needing a “different opinion every day” is well made. So too is the emphasis that politicians will have to work on “business timescales”.

That said, it is also worth noting that a business would be swift to reverse an erroneous decision that created such a shambles.

It is worth emphasising we are now more than 19 months on from that ill-judged Brexit vote of June 23, 2016. That is a long time, so the lack of impact assessments or a position paper on a key sector to inform negotiations is astounding even in these bizarre times. It is easy to understand the surprised exasperation of those in the worlds of business and economics who are looking for some answers but not getting them.

All the while, the fog of uncertainty over Brexit swirls, with little or no sign of any lights to guide businesses through it.

The effects of this uncertainty are clear from a slew of economic releases.

Only this week, the CBI published a survey revealing the Scottish manufacturing sector is set to cut very significantly its investment in plant and machinery and in product and process innovation over the next 12 months.

Investment intentions in these two areas are at their weakest since April 2012, in terms of the scale of decline indicated.

Alpesh Paleja, the CBI’s principal economist, declared: “Not just in Scotland but across the UK we know that…uncertainty over Brexit is holding back some very large investment plans.”

And this is the problem. It is the big investment projects, which might boost weak growth and could help improve the UK’s woeful productivity, that have been put on hold while businesses await clarity on Brexit.

This is perfectly understandable. Why would company chiefs commit to major expenditure amid all the continuing unknowns around how Brexit will affect the businesses they run and the economy?

Obviously, some of the effects of the June 2016 vote have materialised already. The Brexit vote has fuelled skills shortages in a raft of key sectors. Sterling’s post-Brexit vote weakness has sent the cost of imports soaring. As annual UK consumer prices index inflation has surged, there has been a renewed fall in real wages, with official figures this week confirming this drop is continuing.

The inflationary pressures were evident again in the CBI’s Scottish and UK-wide industrial trends surveys this week.

The CBI also flagged growing skills shortages, noting Brexit, while not the only influence, was a key factor in these. The proportion of UK firms citing availability of skilled labour as a factor likely to limit activity over the next three months was the highest for more than four decades.

Mr Paleja said: “In manufacturing, [what] we are hearing from members is some EU nationals are either going home to Europe or are hesitant about coming to the UK because of what they perceive to be anti-immigration rhetoric.”

Such rhetoric was a depressingly common feature of the febrile debate ahead of the Brexit vote in the referendum that never needed to be called. Just as lamentably, it has prevailed amid the ensuing shambles.

It beggars belief that, in a struggling economy with a tight labour market and an ageing population, the UK would do anything to jeopardise the presence of current and potential future employees from other EU countries that myriad sectors and the economy as a whole so desperately need.

That said, it is no wonder

workers from other EU countries

are either leaving the UK or not coming here.

There are enough uncertainties, without waiting for the UK Government to get its act together to try to mitigate the Brexit damage, particularly when it is showing no sign of doing so any time soon.

So, as the economic problems of the Brexit vote grow in terms of holding back key investment, renewed falls in real pay, and growing skills shortages, to name but a few, it is demoralising the UK Government seems to be adopting a Bart Simpson-style “dog ate my homework” philosophy.