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Gary Streeter MP for South West Devon

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.

 

Thursday, 25 August 2016

​A PHONEY WAR!

Britain declared war on Nazi Germany in September 1939. Nothing much happened in terms of military action, certainly affecting Britain, until spring 1940. This period become known as the phoney war. Everybody knew that we had made a massive decision, but life went on largely as before, with a growing sense that something unpleasant was just around the corner.

Since our decision to leave the EU on 23rd June, it strikes me that we are in an comparable situation. The country has made a massive decision, which the government will follow through to its conclusion, but not much has changed yet for the person in the street and nobody is quite sure what the consequences will be. A phoney war.

The Bank of England clearly think that the economy is about to turn down and have acted, but recent reports, only slightly historic, of economic activity have not confirmed that. Assessments of the impact on world trade and the global economy appear to fluctuate wildly.

What is going on out there? Nobody seems to know for sure.

The next six months will give us a more accurate picture of the impact of the Brexit decision. It is important that we do not talk ourselves into a recession by taking unnecessary steps. I have been talking to large local employers over the summer who mainly confirm that their order books remain high, but because economists are predicting a slowdown, several are taking steps to "right-size" just in case. Rightsizing is a modern euphemism for laying people off.

If too many firms do this in an anticipatory fashion, it will simply create the problem we are all trying to avoid.

Hopefully we can get through the next year without recession. The next major challenge will be the outcome of the Article 50 negotiations themselves, especially in relation to accessing the single market. I expect these talks to get underway in 2017 and quickly to get to the key issues. You don't have to be a genius to recognise that if we come out of the single market there will be an inevitable economic price to pay. This will be the political focus of the next 18 months.

AIn 1940, the harsh reality of warfare came home to roost in a brutal way. The UK government will do everything in its power to ensure that this EU phoney war will finish well – in a way that takes our country forward.

posted by Gary @ 09:35