Johnson must be mad if he thinks Britain can afford a no-deal Brexit | William Keegan | Business

Does Boris Johnson want to go down in history – or just down and down? At present all the signs are that, if he goes on in the direction he and his frightful lieutenant Dominic Cummings are heading, he will go down (and down and down) as having run the most disastrous government most of us can remember. Moreover, he will be forgiven by neither this generation nor the next.

We shall come back to that. First we must consider the big news of the moment, Chancellor Rishi Sunak’s summer statement – a mini-budget whose scope necessitates a redefinition of mini-budgets. It was breathtakingly huge, but necessary. Inevitably, there were gaps, where an effort to rescue jobs and compensate for the damage caused by a government-imposed depression helped many victims but neglected some. But, on balance, a rightwing chancellor and a Treasury whose traditional raison d’être is to keep an eye on spending levels have together risen to the occasion, with a little help from our “build, build, build … spend, spend, spend … end austerity” prime minister.

But how long is the occasion? One of the most eyecatching moments in the chancellor’s presentation was when he said that the 25% collapse in gross domestic product in two months as a result of the lockdown had negated the previous 18 years of economic growth. “I will never accept unemployment as an inevitable outcome,” he said, before proceeding to warn of the sharp rise in unemployment in prospect, which his measures – let’s face it – were designed, at best, to mitigate.

Now, that “occasion”. You know the cliches: an unprecedented crisis, the need to do “whatever it takes” – as when the European Central Bank’s governor, Mario Draghi, promised in 2012 to save the eurozone while Germany was asleep at the wheel. Borrow, borrow, borrow; print money, print money, print money; all hands to the pump.

That is all very well, says the consciously unbiased person on the half-empty, virus-infected Clapham omnibus, but how is this going to be paid for? When does the reckoning come?

Well, the answer at present is: the counterpart to the record-breaking level of government borrowing is the large amounts of savings. The level of savings in the depressed domestic economy is enormous; and, with an average maturity of about 15 years on government bonds – which are purchased all over the world – the show can be kept on the road.

President Franklin D Roosevelt, seated behind microphone, Washington DC, 1937.

President Franklin D Roosevelt, 1937. Photograph: Underwood Archives/Getty

But not for ever. And this brings us back to “My hero is Roosevelt” Johnson and his chancellor. Having known all his predecessors since Reginald Maudling in the early 1960s – with the exception of Sajid Javid, who was sacked by the ruthless Johnson even before he had familiarised himself with the corridors of power – I am accustomed to the tradition of my colleagues in what we still call Fleet Street speculating about the dangers to a prime minister from a strong chancellor.

There is plenty of such speculation at the moment, and as long as he is dispensing money, digital or tangible, Sunak is riding high. But he did point out that the reckoning – higher taxes – would come at some point. Moreover, history suggests that periods of crisis are followed by an increase in the level of taxation an economy has to bear – after both the first and second world wars, for example.

Sunak voted for Johnson as leader. My view is that the two of them are in this together. At a time when the media delight in reporting U-turns, the two of them have an opportunity, which I fear the odds are against them taking, to conduct a historic U-turn – one that would guarantee their place in history, and alleviate the damage being inflicted on our economy.

We all know that Johnson more or less tossed a coin over whether to support Brexit. It is also clear from what Sunak wrote before the referendum that he thought his decision – he too voted for Brexit – was finely balanced.

Well, it becomes more obvious by the day that a no-deal Brexit would be an unmitigated disaster, and both Johnson and Sunak have access to unpublished government forecasts of just what a disaster it would be. It is obvious to the Treasury that no-deal Brexit and Johnson’s “FDR” ambitions are irreconcilable.

Regrettably, this strange country has left the EU and is merely enjoying a period of grace. The sensible option is to conduct negotiations in a manner that keeps us as close as possible to the EU. This, by the way, is what pollsters tell us the majority of Britons – who are now majority-Remain! – now want.

For the moment, however, the behaviour of our so-called leaders calls to mind a classical quotation that may be familiar to Johnson: Quem deus vult perdere, prius dementat. “Those whom the gods wish to destroy they first make mad.”

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