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Brexit has made the UK the sick man of Europe once more

Britain has created new economic problems without resolving its existing ones. 

Though it didn't feel like it at the time, the years preceding 2017 now resemble an economic golden age for the UK. After the damage imposed by the financial crisis and excessive austerity, Britain recovered to become the fastest growing G7 country. Real earnings finally rose as wages increased and inflation fell (income per person grew by 3.5 per cent in 2015). 

And then the Brexit vote happened. Though the immediate recession that the Treasury and others forecast did not materialise, the UK has already paid a significant price. Having previously been the fastest growing G7 country, Britain is now the slowest. Real earnings are again in decline owing to the inflationary spike caused by the pound's depreciation (the UK has the lowest growth and the highest inflation - stagflation - of any major EU economy). Firms have delayed investment for fear of future chaos and consumer confidence has plummeted. EU negotiator Michel Barner's warning of a "very disturbing" deadlock in the Brexit talks reflects and reinforces all of these maladies. 

While Leavers plead with Philip Hammond to set money aside for "a no-deal scenario", the referendum result is daily harming the public finances. The Office for Budget Responsibility has forecast a £15bn budgetary hit (the equivalent of nearly £300m a week). To the UK's existing defects – low productivity, low investment and low pay – new ones have been added: political uncertainty and economic instability. 

The Conservatives, to annex former Chancellor George Osborne's phrase of choice, failed to fix the roof when the sun was shining. Rather than taking advantage of record-low borrowing rates to invest in infrastructure (and improve the UK's dismal productivity), the government squandered money on expensive tax cuts. The Sisyphean pursuit of a budget surplus (now not expected until at least 2027) reduced the scope for valuable investment. Productivity in quarter two of this year was just 0.9 per cent higher than a decade ago - the worst performance for 200 years. 

Having softened austerity, without abandoning it, the Conservatives are now stuck in a political no man's land. Brexit and the loss of the Tories' majority are imposing ever greater demands on the fiscally conservative Hammond. The £26bn war chest that the Chancellor had assembled may have been reduced by as much as two-thirds

As the UK drifts towards the Brexit cliff edge in ever worse shape, it is left to reflect on opportunities missed and potential wasted. Britain, which embraced the European project to escape its "sick man" status, is once more worthy of that ignomonious title. 

George Eaton is political editor of the New Statesman.

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Will the Brexit Cabinet talks end in a “three baskets” approach?

The joy of the three baskets idea is that everyone gets to tell themselves that it will be their basket that ends up the fullest. 

It's decision day in the Brexit talks. Again.

The Brexit inner Cabinet will meet to hammer out not its final position, but the shape of its negotiating position. The expected result: an agreement on an end state in which the United Kingdom agrees it will follow EU regulations as it were still a member, for example on aviation; will agree to follow EU objectives but go about them in its own way, for example on recycling, where the British government wants to do more on plastic and less on glass; and finally, in some areas, it will go its way completely, for instance on financial services. Or as it has come to be known in Whitehall, the "three baskets" approach.

For all the lengthy run-up, this bit isn't expected to be difficult: the joy of the three baskets idea is that everyone gets to tell themselves that it will be their basket that ends up the fullest. There are two difficulties: the first is that the EU27 won't play ball, and the second is that MPs will kick off when it emerges that their preferred basket is essentially empty.

The objections of the EU27 are perhaps somewhat overwritten. The demands of keeping the Irish border open, maintaining Europol and EU-wide defence operations means that in a large number of areas, a very close regulatory and political relationship is in everyone's interests. But everyone knows that in order for the Conservative government to actually sign the thing, there is going to have to be some divergence somewhere.

The bigger problem is what happens here at home when it turns out that the third basket - that is to say, full regulatory autonomy - is confined to fishing and the "industries of the future". The European Research Group may have a few more letters left to send yet.

Stephen Bush is special correspondent at the New Statesman and the PSA's Journalist of the Year. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.