Theresa May is not the first politician to have been caught out saying one thing to an audience of bankers and another to voters. Earlier this month Hillary Clinton, the US presidential candidate, was revealed to have taken $675,000 to speak at Goldman Sachs where she adopted a friendlier, more pro-business persona than that offered to the American public. On this side of the Atlantic the Guardian unearthed an audio recording of a previously undisclosed private question-and-answer session the prime minister had with Goldman Sachs bankers this May on the defining issue of Britain’s relationship with Europe. In a wide-ranging discussion the PM went beyond her current gnomic utterance to voters that “Brexit means Brexit”. The then home secretary showed in private that she was more committed to staying in the European Union than the tepid support she gave to the remain campaign. Her most revealing exchange is her stark warning that corporate outlays in the UK would be at risk if the country left Europe. Yet a month earlier in her only major speech she blamed “discrimatory EU policies” for the threat to investment in a post-Brexit Britain.
It is an irony that in the cloistered preserve of Goldman Sachs, a temple of power and privilege, normally guarded politicans lift the veil of caution. We must be thankful for small mercies. In private to bankers Mrs May said if we voted to leave, European business would make rational decisions about the size of the EU trading bloc, and leave Britain. In public she blamed such decisions on Brussels for discriminating against Britain. Jeremy Corbyn, who missed a trick to hammer home this point at prime minister’s questions, later correctly identified Mrs May’s Janus-like pronouncements. The questions raised by the Goldman Sachs tape are clear: Does she believe now what she said then? If not, why not? The evidence is mounting that she was right to point to stormy times for a Brexit economy in the years ahead. A new analysis by the Resolution Foundation finds that the economy is likely to shrink by £60bn, most of this down to leaving Europe.
This smaller Brexit nation would be characterised by lower average earnings, higher inflation and 600,000 fewer jobs in 2020. No wonder the chancellor, Philip Hammond, is fighting a rearguard action to maintain access to the single market. The study says he will be staring at an £84bn hole in the public finances. Mr Hammond knows his room for manoeuvre is tight – and that he will have to fudge or break George Osborne’s rules on spending and debt as a proportion of GDP to ensure the motor of the economy does not stall. No doubt leading Brexiters will drop their ideological objections to a looser fiscal position so that extra taxpayers’ cash can be spent to keep the engine ticking over as the gears shift to a post-European economy.
The wider macroeconomic picture is criss-crossed by unpromising circumstances. The politics turns towards a harder Brexit: outside the single market, with maximum control over immigration. The economics would be costly: raising questions over whether London can maintain its position as a major hub for financial services across the EU. The UK’s position as the ninth-largest exporter in the world is threatened. Curbs on EU migrants, who pay more in tax than they take out in benefits, may strain public finances. How to resolve such contradictions remains a puzzle even to those involved at the highest level of government, as the leaders of the devolved assemblies found on Monday.
Unlike other remainers, as home secretary Mrs May failed to vigorously defend Britain’s EU membership. Her one speech was a Eurosceptic explanation of why, after considering the pros and cons, she thought it was best to vote remain. In that speech on the crucial question of the British economy she played up her Euroscepticism. This has helped to set a direction of travel for Britain’s economy that she herself condemned to Goldman’s bankers. Why did Mrs May say one thing in private and another in public?
