Thread by @nicktolhurst

As I’ve been saying here for sometime:

>>Brexit “cannot fail”<<

It cannot be allowed to fail as the UKs identity, the Tory party & large swathes if the media have tied themselves to it.

But Brexit doesn’t bring any benefits & a lot of costs so how do you make Brexit succeed...

2/

Johnson realises that Brexit will impose massive costs on UK economy - particularly post Jan 2021 - so needs something huge to kick in before 2024 election - there’s only one answer:

Massive govt spending on things he can control like infrastructure.

3/

This explains obsession with HS2, bridges a northern MIT etc.
Infrastructure is Labour heavy and cuts off Labour demands for extra spending.

But there’s a problem.
At the start of financial crisis with debt around 40% of GDP such huge borrowing would have been manageable....

4/

But now with govt debt at 80% of GDP UK runs the risk of passiting the 100% mark where most economists agree debt interest so high as a % of govt spending that reduction in govt debt to GDP increasingly becomes impossible without constant high growth - the “Italian trap”.

5/

Basically Boris throwing the dice with Britain’s future - & going all in.

If it succeeds borrowing infused UK growth will hide Brexit costs & Johnson gets re-elected on back of can-do infrastructure.

If it fails UK will be out of single market, low currency, high govt debt.

6/

Whatever happens now the old Tory fiscal rectitude is gone.

UK now has a Trumpist (other people’s money) govt - this can work where everyone needs $ & US deficits can go on forever.
Quite a different thing when you’re trying to sell Brexit Britain...

/Ends