Boris Johnson entered Downing Street in July 2019 with a promise. Doubters, pessimists and pessimists alike would be wrong again: his leadership would make Brexit a success, reigniting an economy stuck in divisions over Europe.
Three years later, almost to the day, he is preparing to leave with a country reeling from a political implosion of its own initiative and an economy on the verge of recession.
The cost of living is accelerating at the fastest annual rate in four decades, while families are the hardest hit in terms of real disposable income.
It wasn’t in the booster script. To be fair, neither was the biggest global health emergency in a century and war on European soil.
Britain’s economy suffered the biggest fall in the G7 in 2020 as the coronavirus pandemic caused economies around the world to come to a sudden halt. When the country reopened after the lockdown, Johnson pointed to the the fastest growth rates in the G7.
However, this setback is partly due to the scale of the decline, as the UK – more reliant on consumer services – entered lockdown later and longer than some other countries, leading to the worst recession since 300 years.
Amid this succession of generational shocks, experts say deep structural flaws have been exposed – all made harder to fix by three issues: the legacy of austerity; Brexit; and Johnson’s lack of a cohesive plan to deal with them all.
“This whole period is his legacy,” said Professor Jagjit Chadha, director of the National Institute for Economic and Social Research, who believes that without Johnson’s key role in the Vote Leave campaign six years ago, Brexit might not have happened. At least not in the same way.
“It has dominated our economic performance since 2016,” he said, referring to the year Britain voted to leave the EU.
The result has been weak business investment – with spending estimated to be around 20% lower than it would have been without Brexit – as well as limited improvement in living standards.
Without sufficient investment and productivity gains – and now with a lack of workers to fill record vacancies – it has become more difficult to grow the economy without fueling inflation.
Prices are rising at a rate of 9.1% and heading towards 11% in October. The Bank of England is responding by raising interest rates to the highest levels since the 2008 financial crisis, with further hikes expected next month.
“We had very slow growth,” Chadha said. “To be fair to Johnson, there has been a series of mistakes made by successive governments. Brexit was seen as the answer to our economic problems. In the way it was handled, it only did exacerbate them.
In the minutes and hours after the referendum result was announced, the pound plunged more than 10%, to its lowest level since 1985. The pound has remained under pressure ever since, helping to push up the inflation and erode the standard of living.
The Government’s independent economic forecaster estimates that the long-term impact of Brexit will mean a 4% impact on the economy after 15 years.
As a process, rather than an event, the damage is still being felt. Disrupted trade and tons of red tape at the border led to a 40% drop in exports to the EU in January 2021, the first month after Brexit. Although monthly EU exports have recovered, the UK’s trade performance is lagging behind a post-lockdown surge in other major economies.
Far from the promises of politicians, Brexit is not “done”. Business leaders warn that investments in the UK have been hit by uncertainty surrounding the Northern Ireland protocol.
Johnson tested patience in corporate boardrooms, stretching the Tories’ usually cordial relationship with the City with a “damn business” view of Brexit concerns.
That Brexit is not working as expected is agreed by many of its supporters as well as its opponents.
Prominent Brexit supporter Gerard Lyons, who was Johnson’s top economic adviser when he was mayor of London, said predictions about the long-term damage were wrong, but the process could have been better managed.
“The plus was getting Brexit done, clearly. But the Withdrawal Agreement itself wasn’t as good as it should have been. It’s not just leaving, it’s what you do when you leave. And it’s not an event, it’s a process,” he said.
Lyons, now Netwealth’s chief economic strategist, said “Treasury orthodoxy” – imposing tight constraints on taxes and spending – had held the prime minister back. However, Johnson’s lack of a coherent plan also made it more difficult to convince Rishi Sunak, his chancellor, to loosen the purse strings.
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“The real challenge is that Boris didn’t really have an economic vision to stand up against Treasury orthodoxy,” Lyons said.
“It’s not a challenge specific to Boris Johnson, it has permeated the upper levels of UK policy-making for decades. It’s one of the most important issues to tackle.”
Johnson will likely be remembered for having eye-catching political plans without sufficient substance, as the Conservative Party fought for the right size and shape of state.
Unlike other Tory leaders of the past decade, he believed more in state intervention and the power of public spending, promising to even out regional imbalances in Britain.
But the promised rebalancing has been pushed aside as the nation weathered first the pandemic, then inflation fueled by the restarting global economy, then war in Ukraine.
Three years after his first speech on the steps of Downing Street, the problems facing the economy have worsened rather than lessened.
