After Brexit, many on the left argued that the surprise result had revealed a progressive blindspot. Fears about immigration and the European Union, so the argument went, were actually a profound reaction to the driving down of wages by low-paid immigrants, as well as a wider reaction to the forces of globalisation.
As far as the model post-Brexit company goes, then, John Lewis is perfect. It’s a British firm with a proud history, but it is also a company that looks after its staff. All 84,000 permanent staff are partners in the business, with a stake in the John Lewis department stores, Waitrose supermarkets and other assets, and receive a generous cash bonus. Theresa May might have shied away from the idea of workers on boards, but John Lewis already does it.
So the fact John Lewis’s profits before tax were down 53.3 per cent in the six months to 29 July 2017 should worry Brexiteers. While John Lewis said the slump in profits was partly down to an internal shake-up, it also blamed “inflationary pressures driven by exchange rates and political uncertainty”.
Sterling took a nose dive on 24 June 2016 and has not really recovered since. The Lexiteer theory is that more expensive imports should encourage manufacturing at home. But this did not happen the last time sterling took a tumble, after 2008, and at the moment, the most obvious impact of weaker sterling is rising prices. In an age of specialisation, even domestic manufacturers rely on complex supply chains, with individual components imported from abroad. In August, UK inflation jumped to 2.9 per cent – a four year high.
Political uncertainty, too, seems to be affecting our buying behaviour. While consumer confidence recovered after the Brexit vote, it has since drifted back downward, according to the GfK survey. House price growth is slowing. Some may celebrate this fact, but a sudden crash is unlikely to benefit anyone except wealthy property investors who can afford to bide their time.
John Lewis said in its latest results that it has continued to increase pay, to £8.87 an hour for non managers – £1.37 more than the government’s own touted minimum wage hike. It would be an odd irony of Brexit if the firms that get squeezed the most are the ones apparently most in line with the ideals of the Brexiteers in the first place.