The Conservatives once prided themselves on being “the party of business”. Unlike Labour, they suggested, they would always prioritise wealth creation over other aims (such as redistribution). Though this reputation was often undeserved (plenty of Tory policies reduced growth and widened inequality), it was undeniably potent.
But Brexit is having a corrosive effect. On the Today programme this morning, Iain Duncan Smith conceded that there would be downsides to EU withdrawal before declaring that “British business will have to learn to get by in a different world”. This, in short, is the Tories’ Brexit policy. Theresa May has vowed to withdraw Britain from the world’s largest single market for the sake of ending free movement. The UK is already paying an economic price: it is no longer the fastest-growing G7 economy but the slowest; real wages have fallen for the last eight months (owing to the Brext-linked spike in inflation). Business, however, will “have to learn to get by” (the FT estimates that the UK is £350m a week worse off than if it had voted Remain).
There are political as well as economic consequences to this choice. The Conservatives’ decision to disregard prosperity has made it far harder for them to present Labour as an economic threat. In the view of some businesses, there is no more disruptive policy than single market withdrawal. As Michael Heseltine recently told me when I asked how he would act if forced to choose between Brexit and a Jeremy Corbyn government: “I can tell you, there are serious numbers of Conservatives who are aware of the danger of that question”.
When Corbyn recently denounced Morgan Stanley (“we’re a threat, they’re right”), the Tories were not able to attack him with the effectiveness that they once would have done. It is no accident that when debating the economy at PMQs, Theresa May now rarely gets the better of the Labour leader. Nor, with the deficit not due to be eliminated until 2030/31, can the Tories grandstand as the party of fiscal responsibility.
But just as the Tories’ championing of “the people” over profit has made it harder for them to impugn Corbyn, so it makes Labour reluctant to condemn Brexit. As a senior Corbyn ally recently told me: “Our essential analysis is that the political and economic elite has failed the country, and it’s led to this insurgent feeling and a cynicism about the British establishment, which has done a lot of damage to the Labour Party brand in the past. Because of that, it’s very difficult for us to look as though we’re prepared to say we know better than the electorate on a decision like Brexit.” Though Labour has not ruled out promising a second EU referendum, it will not do so unless there is an unambiguous shift in public opinion.
In different ways, the Corbynites and the Brexiteers seek to subordinate business to politics. Nearly a decade after the crash, the “masters of the universe” are being forced to account to the people. Politics is no longer a quest to inhabit the “centre ground” but a battle between competing radicals.