When will economic reality catch up with the lunacy of the hard Brexit lobby now with its hands on the tiller of HMS Britain. Will it happen before October 31st, as sterling weakens and the warnings from UK businesses turn into a wall of noise, backed up by redundancy notices? Or will it be after a no-deal Brexit which is forecast to bring consumer panic, food shortages, chaos at borders and increased crime in a note written by UK officials and obtained by Sky News this week. And that's only in the first fortnight.
But, really, nobody knows.
The Irish Central Bank added caveats all over the place in its forecasts for a no-deal scenario in Ireland published during the week. And it was dead right. Because both the economics and politics of this could interact to push events in a number of possible directions.
You can see the obvious pressure points and the scope for upheaval in the event of a no-deal – and my gut feeling is that it will hit the UK economy quickly and nastily. But there is another school of thought, including some clever people who are not Brexit supporters, who feel that the UK might muddle through the initial chaos.
Pretty much every agency and forecaster agrees that in the long run any kind of hard version of Brexit will leave the UK much worse off than it would have been if it stayed in the EU. But it is the extent of the short-term hit which will drive the politics.
There is one initial unanswered question. Is Boris Johnson planning to hold a general election in September, perhaps after the House of Commons thwarts his drive to a no-deal, if , indeed, it can?
Or does he actually believe that having taken the UK out of the EU on time in a no-deal exit will pave the way to electoral victory despite the likely upheaval?
Whether the EU would take any further steps to reduce the impact of a no-deal Brexit is an interesting question. Quite possibly not, given the current rhetoric from London.
Dose of the wobbles
But the economic challenge to Johnson's tactics will start long before October 31st. The foreign exchange markets are watching, and sterling is already having a dose of the wobbles. If a no-deal Brexit starts to look inevitable, then sterling will drop like a stone. The price of imports into the UK will rise – Bank of England governor Mark Carney pointed to food and fuel as the likely first reactors.
The Johnson government is trying to portray this as a positive – helping UK exporters – but a currency crisis, with all the upheavals, headlines and uncertainty it brings, is never a good thing.
Then there will be the noise from businesses, farmers and the many other groups affected. Many of these people voted for Brexit, of course, but the penny is surely now starting to drop. The Conservatives will be hit with a wall of warnings about upheavals, job losses, food and drug shortages and on and on. This will be on a scale way above what we have seen so far. Many middle-ground Conservatives are going to start getting very nervous.
Sooner or later this nonsense is going to crash into economic reality – really hard
The UK is going to be a fractious and unstable place over the next couple of months. Markets – and businesses – always try to move ahead of events. The more the drumbeats sound for a no-deal, the worse it will be.
If Johnson does push ahead through this to a no-deal how quickly will reality then hit?
If the UK electorate feels that leaving the EU will be “getting it over with” then it will be gravely disappointed. Years of talking – of some kind – lie ahead. One view is that the UK would be forced to come back to the table quickly to look for a trade deal with the EU, with its proverbial tail between its legs. But the timing of this is hard to predict, particularly if the initial impact isn’t quite as extreme as feared, or there is a perception that the “ worst is over”.
Whip hand
But the EU is the UK’s biggest market, and at some stage a trade deal would come back on the table. And as the bigger player the EU would have the whip hand.
If Johnson decides instead to first strike a deal with the US then he will face President Donald Trump, who will have no hesitation in using the power he will have to try to push for what he wants. Just look at how he is dealing with China, where he has again upped the ante with more tariffs on goods it is selling into the US.
The economic impact of a no-deal will be immense even if the timing is uncertain. One of the scary things now is how all the talking about it has almost seemed to normalise the idea, in the UK at least. Taoiseach Leo Varadkar is right that this is something to be feared, not accepted.The rhetoric of the UK government suggests that a no-deal can be survived – albeit with a few bumps and bruises – and that the UK can thrive afterwards.
Sooner or later this nonsense is going to crash into economic reality – really hard. You would hope it happens soon enough for those who are selling all the lies and bluster to be thrown out of office by the electorate before they do too much damage. But right now it doesn’t look like it.
Still, Johnson has only been in power for just over a week, his majority is wafer- thin and the final drama has yet to unfold.
This one still has a way to run.