Burnham's opportunity

Andy Burnham (Source: here)

Britain's next Prime Minister, Andy Burnham, will inherit a country that differs markedly from that of his post-Brexit predecessors in one vital respect: the Brexit promise to bring immigration down and 'take back control' has finally been achieved.

To see the extent of the decline in immigration in Britain take a look at the chart below. Ten years after the Brexit referendum, net immigration in Britain is now on track to reach levels last seen a decade prior to Brexit. Even the sharp spike in immigration in the immediate aftermath of Brexit is almost reversed, much of it due to the policies of Burnham's predecessor, Keir Starmer.

(Source: here) 

The political consequences of collapsing immigration are difficult to over-state.

Provided that he can get the news across to a mistrustful British public - which may prove a bit of an ask - Burnham will be the first Prime Minister in a long time NOT to have to make immigration the top political priority of his government.

Still, the end of immigration's strangle-hold on British politics is a double-edged sword for Burnham.

On the plus side, it will take the wind out of the sails of Nigel Farage and other English xenophobes, whose political careers are built on vilifying foreigners. The recent by-election in Makerfield is a taste of what is to come - a collapse in support for Farage and his brand of racist populism.

On the other hand, Burnham will not be able use immigration as a fig leaf for doing nothing about the country's real underlying problems. Immigration was never the actual cause of Britain's problems, but served, for a time, as a useful distraction for politicians, who did not have the guts to get to grips with the deeper issues. Without this distraction, Burnham now has no choice but to do some real work.

This is an opportunity, but not without major challenges. Burnham must find a way to quickly and meaningfully improve the lives of ordinary Brits or Farage and his ilk will soon return to send Britain into an even bleaker future.

Challenge number one will be Britain's long-standing productivity problem, which has only worsened under Brexit. Low productivity is due to chronic underinvestment in human capital and infrastructure as well as repeated failures to overcome the North/South divide and lingering class divisions, including de facto dual economies in education, housing, and health care.

Burnham also has to make do with a lot less tax revenue. The UK economy is between 4% and 8% of GDP smaller than it would have been without Brexit - the hefty price Britain had to pay to get rid of Joe Foreigner and for no longer being able to access the EU market freely. Worse, these costs look set to continue to rise as the British population ages and has fewer kids, and as long as Britain remains outside one of the big trading zones.  

To add insult to injury, Burnham takes over the reins of a government saddled with so much debt that it constantly teeters on the edge of crisis. There are therefore no easy fixes. Every pound Burnham spends on Peter he will have to take from Paul. Taxes will almost certainly have to go up if he wants to realise his dream of major infrastructure investment, but higher taxes deter investment and growth, at least in the short term.

The most obvious route to success - one that instantly brings in more investment, more exports, more growth and therefore also more tax revenue - is to re-join the EU, but is Burnham brave enough to go down that road if it means higher EU immigration? Some move closer to the EU seems likely, but whether it is enough remains to be seen.

Challenges notwithstanding, it would be excellent news if Burnham manages to consign the all-consuming immigration issue to the political back-burner. For far too long, this one issue has scapegoated essential and hardworking people and enabled a long line of governments to shirk their responsibility for reversing Britain's decline.

The End