Russell Lynch: Business will never learn the doublethink of Big Brexit

It's apt that the fiercest exchanges between Government and business on Brexit so far have fallen in the week of George Orwell’s birthday.

At the end of his most famous work, Nineteen Eighty-Four, the protagonist Winston Smith — tortured and brainwashed into submission — gazes up at a poster of Airstrip One’s totalitarian figurehead and his final thoughts complete the novel: “It was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.”

Although occasionally troubled by “false memories”, Smith had finally mastered the art of doublethink: simultaneous belief in contradictory ideas.

Unfortunately British business has yet to complete the same task.

Because it’s mostly governed by logic and rationality, it can’t learn to love Big Brexit. It can’t believe that throwing up extra barriers to trade and commerce with our largest single market will be a good thing for production and profits.

Unlike British politicians — and Winston Smith — it can’t believe that black is white, or that two plus two equals five, and now it’s begun to act accordingly. Hence the recent warnings from Airbus about moving manufacturing, and from the Society of Motor Manufacturers and Traders about tumbling car industry investment.

But companies which diverge from the ideological purity of Brexit are treated to private expletives by Cabinet ministers or scorned in public for behaving “completely inappropriately” in the case of Airbus, which is simply protecting its own interests. With nine months to go until the big day and no deal in sight, why shouldn’t they?

Brexiteers might argue that it’s a bit rich comparing the result of the biggest democratic exercise the country has ever seen with a novel warning about totalitarianism.

Fair enough. But the intolerance of dissent since the vote has shades of the Thought Police, alongside the Orwellian mental leap the country’s leadership seem to be requiring of its wealth creators. Surprise, surprise, business isn’t buying it. A host of industry surveys have pencilled in anaemic business investment growth this year, with the British Chambers of Commerce forecasting just 0.9%. That would be the worst since the aftermath of the financial crisis, barring of course, the year of the referendum itself.

Outgoing monetary policy committee member Ian McCafferty gave us an unsentimental view of the likely Brexit economy in his final speech as a policymaker this week.

“Another set of factors is likely to hold back productivity growth in coming years — the transition to Brexit and, were they to materialise, less open trade and investment arrangements after Brexit,” he warned.

The final picture depends on the outcome of the talks, but his overall message on business investment was also stark. According to the Bank of England’s survey — and as big business has now been explicitly confirming — business investment plans have been put on hold. This weighs on “capital deepening” — that is, efforts to improve output through new technology to bolster productivity. Slowing net migration will also affect the UK’s supply potential, he added.