Blain’s Porridge Extra 14th July – Explaining UK Politics and Why Brexit is the Real Hurdle
To my great surprise a couple of American chums have asked me to explain what is going on in UK Politics re replacing Boris..
It’s fascinating… and more than a little mad. So let me get out my crystal ball to outline how UK politics might just play out. Politics matter in markets – and my conclusion is the UK is far from fixed and long way from stable.
The 360 odd Tory MPs each get a vote in deciding which two candidates for leader will be put in front of the 200,000 members of the whole Conservative Party. The contenders are being whittled down over the next few days. What you need to understand about the Tory party is it is highly factional, and riven by personalities – but really everything boils down to a core tenant of faith – Brexit.
Yep, Brexit will remains the cancer that keeps on taking… More about that below, but whatever happens arguments about Brexit will likely hold back UK growth for years to come. (And that’s from a man who voted to leave..) We don’t need to abandon Brexit – just refine it and make it fit for purpose in a changing Global and European economy. Any politician who can move forward on Brexit – gets my vote. But they are unlikely to be a Tory.
The race for the premiership is turning into a very interesting battle between 3 contestants. By this time next week two of them will face the whole party – although the two winners could agree to work together, negating the need for a member vote. (Boris would love that – it will enable him, Trump like, to claim his successor has no mandate to lead.)
Rishi Sunak – “Dishi Rishi” is the former Chancellor of the Exchequer who rose without trace in the party he joined in 2015 becoming an MP for the UKs safest Tory seat when the sitting MP suddenly resigned. After Chancellor Sajid Javid was sacked by Boris in 2019, the former Goldman hedge funder got the second most powerful job in the land to do what Boris and Dominic Cumming told him to do. He made himself popular with pandemic giveaways, and less popular with subsequent tax rises. It’s been clear for a long time Boris feared Sunak’s rising star and popularity, and was briefing against him – revealing Sunak’s wife (daughter of an Indian billionaire) was registered as Non Dom for tax purposes. Interestingly Sunak registered the website for his current leadership campaign way back in November 2021. Sunak is seen as a Brexiteer and moderate, but has peeved many party members for not being a tough conservative in terms of low taxes.
Penny Mordaunt – Is a tough talking, hardline, Royal Navy Reservist. She was briefly defence minister, before being sacked by Boris after she didn’t resign from former premier Theresa May’s cabinet when he did. He later brought her back into government with a junior role of for trade policy. She is very popular among Tory rank & file and does a nice line in patriotism involving film of Spitfires, Lancasters and Royal Navy Carriers. (Great story about her: in 2014 she had to pay a forfeit for some Royal Navy training indiscretion, her punishment being to use the word “cock” in a parliamentary speech. She did – 6 times! Respect.) She is favourite to win because she spans the Tory Right Wing, is very popular at Party level, and is said to be pragmatic over Brexit – but no one really knows, and no candidate can risk saying “we need to think about `Brexit” .
Liz Truss – “Tank Girl” – is UK Foreign Secretary and the preferred candidate of the Tory Right Wing. Although a Remainer in the referendum, she is now a hard-line Brexiteer. She has had very public support from Jacob Rees-Mogg (minister for the 16th century) and Nadine Dorries, (who are so far to the right they are practically Communists, but with an aristocratic bent). She is seen as the Boris “continuity candidate”, a proper Eurosceptic who many centrist Tories think will do whatever Rees-Mogg tells her to do.
My guess it will go to a vote between Mordant and Sunak. Mordaunt will win, and Sunak will disappear from the scene, resigning and using his green card to go hedge funding in California.
At that point it gets very interesting…
The next week will see further division in the party. Tank Girl’s strategy is to get on the member ballot by playing the right-wing Tory MP vote. The European Reform Group of the hardline Brexiteers will not surrender any aspect of Brexit. They will insist on breaking the Northern Irish agreement with Europe, and may even threaten a vote of no confidence if any aspect of Brexit is threatened. Truss will campaign by appealing to hardline Brexit party members with Brexit Plus rhetoric to attract MP votes.
If Mordaunt even hints hard Brexit needs pragmatic consideration, she becomes toast. Tory MPs have to decide in the next few days if they support Mordant on the basis their constituency parties love her – who doesn’t like her 1940s vibe in the Tory Shires..? But the Tory Shires are Brexit hotbeds.
However, Sunak and Mordaunt are no so stupid as to miss the reality – Brexit has not worked. Brexit got done, but needs tweaking.
Brexit has been disappointing. The opportunity to seize new opportunities was missed by political incompetence and the Pandemic. Now the UK needs a rejig, reassessment of the real opportunities – limited by issues like geopolitical crisis and change, and the US’ increasing isolationism. We need for a new post Brexit relationship/accommodation with Europe. We need that not just in terms of the economy, but from a defence perspective also.
Boris did some good things for the UK. He kept the country going through Covid. But let’s face it, all that Boris leaves us with is what he brought to the table in terms of his hostility and contempt for Europe. A new premier – with genuine new ideas on how to improve the UK, can move beyond that. The departure of Boris gives the UK a chance to reset the dialog with Europe over future trade with the UK.
That would enable the next government to not only make a success of Brexit, but to address the key UK issues like productivity, the economy, infrastructure, welfare, poverty, NHS reform, state rollback and state pensions, education, devolution and the rest. But it won’t happen. These are all critical policies the nation needs to resolve, but they barely register ahead of brexit with the constituency party, and not high on the priority list, except in the Red Wall seats the Tories won from Labour in 2019.
The Tory right wing will demand a further breach with Europe by insisting we go to economic war over the Northern Ireland agreement, thus making sure the new administration is quickly forced into a “no-negotiation with Yoorp” default mode. It will ensure Boris’ lasting legacy – being unnecessarily rude to our largest trading partner – is carried forward.
If the new Tory Leader and Prime Minister even suggest a rethink, the Tory Right Wing could precipitate a no-confidence vote and a UK General Election – to protect Brexit. It’s a bit lemming-like, but they have the brains to do it.
The reality is whoever wins the Tory leadership election remains in thrall of the Brexiteering Taliban of the ERG.
Maybe a general election would be better?
I am not a Tory supporter. I voted for Boris in 2019 as a vote against Labour extremist Jeremy Corbyn. I am tempted to suggest 12 years of Tory rule is probably enough. It hasn’t been great – a hopeless Cabal with the hopeless liberals, David Cameron’s fall over Brexit, Lame Duck Theresa May, Boris and now this.
It’s time for a political reset.
A couple of years of equally incompetent Labour will throw all the pieces back in the air, let the Tories learn about themselves and why voters matter, let the Brexit fixation burn itself out, and then let’s do it all again..
Who knows.. maybe the UK will sort it out.. eventually..
Strategist, Shard Capital.