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Pringle: 'The best we can look forward to is a two-year recession'

Proud to be an AJ MIPIM 2016 blogger
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Former RIBA president Jack Pringle envisages the best case scenario for a post-Brexit UK

Harold Wilson was never more right: ’a week is a long time in politics’. The referendum was ‘lost’, the PM resigned, 80 per cent of labour MPs declared no confidence in their leader, Nicola Sturgeon’s SNP restated its intention to leave the union and Michael Gove (architects’ least favourite politician) assassinated Boris Johnson. The referendum also revealed deep rifts in our society: young vs old, city vs country, England and Wales vs Scotland and Northern Ireland. Racism has also reared its ugly head. So, for the country, cast adrift rudderless in this socio-political storm: what next?

What next indeed. It was relatively easy to predict the outcome of previous recessions that were induced by sudden economic events: Black Monday in 1987 when stock markets crashed, the dot com bubble in 2000 or Lehman Bros collapse in 2008. A sudden fall would be followed by climb back over a period of time that would be determined by how serious the crash was. But this is a bit trickier. This is political, which is driven by individuals with foibles and motives, not just markets, which are affected by more predictable drivers.

We have given the EU a major problem – one of its big three has left, leaving a hole in its budget and, others might leave, unravelling the union. The worst outcome would be an antagonistic new leader, like Gove, who would rub the EU up the wrong way, and we are left to the mercies of Jean-Claude Juncker, who has been itching to get at Britain since Thatcher and whom David Cameron tried to block as president of the EU Commission. We would get a painful two-year divorce followed by a protracted, say five-year, trade deal. Meanwhile, we have to negotiate trade deals with every single other country in the world or suffer WTO terms. And the Scots would leave us. That looks like a seven to 10-year recession.

Alternatively, we could elect a calmer and wiser leader. Theresa May fits this bill. Hopefully she would get straight on a plane to Berlin to have a chat with chancellor Merkel and our divorce would be settled quickly at head of state level within a year or so. The dream deal would be that we keep paying into the EU (they need the money), we get access to the single market including a ’passport’ for the City, and we get an agreement on free movement of people that is acceptable to us. Hopefully, this would appease the Scots whose oil revenues don’t look so appealing right now, and they would stay. We would still have the rest of the world’s trade deals to set up. Even at this very best outcome I think that we can look forward to a two-year recession. 2016 has already been written off as the first half was pre-referendum paralysis and the second half will be post-referendum turmoil. We are in the hands of May, Merkel and Sturgeon.

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