Boris really boxing himself in with no wiggle room to avoid a red-faced climbdown or no deal, ‘Albanian’ style. The background : a long term productivity crisis that goes back decades, with consumption levels being maintained by borrowings esp among the poor 1/n
Add in the outsized impact of the financial crisis in 2008-9 largely because of the v large financial sector and the particular nature of its exposures and you had a compounding economic hit 2/n
Then we had the tough austerity years in which the capacity of the state in key areas - local government, health, police was severely reduced and the withering of the support networks for the most vulnerable 3/n
Then the Uncertainty of the Brexit vote and the resulting stalling of capital investment (and foreign investment) evidenced among other things by a massive underperformance of UK equities v global equities- a sign that productivity faces further challenges 4/n
Then the COVID hits - which exposed the fraying of state capacity in healthcare and the supersized economic hit given the large service sector 5/n
And you add in a difficult vote in May’s Holyrood elections and it’s easy to see how a No deal Brexit might test the institutions of the country very severely. 6/n
It’s all a bit Juan Peron’s Argentina in the late 1940s when the country basically went mad. It didn’t end well. 7/7

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More from @_Financeguy

22 Jul
Wasn’t this obvious after Lighthizer’s testimony to the House Ways and Means Committee on 18th June?
What’s UK trade policy right now? No deal with the EU, a tattered internal market wrt NI, difficulty in rolling over the deals with EU trade partners (EFTA, Turkey, Japan , Canada and SK), sanctions on and from China and no US trade deal?
So 90% of UK trade likely from 1st Jan 2021 to be subject to tarrifs and NTB- which will throw yet another obstacle in the path of UK firms to retore output after COVID: with a big squeeze on productivity at a time with public debt is rising sharply.
Read 4 tweets
6 Jun
Five charts that help to explain modern Italy. First a political map of the peninsula in 1499. 1/5
Results of the 1946 Referendum on the monarchy 2/5
Regional productivity in 2017 3/5
Read 6 tweets

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