A European Union (EU) flag flies in front of Elizabeth Tower, commonly referred to as Big Ben, during a Unite for Europe march to protest Brexit in central London, U.K. (Photographer: Luke MacGregor/Bloomberg)

Britain Needs Bold Leadership That Goes Beyond Brexit

(The Bloomberg View) -- Sometimes, Brexit seems like it might subsume British public life entirely. So some credit is due to Prime Minister Theresa May, who tried to articulate a broader agenda at her party’s annual conference this week. Regrettably, her policies were a mix of modest improvements and ambitious mistakes — a schema largely out of tune with the challenges the country now faces.

Brexit aside, Britain’s problems are clear enough. Weak wage growth has eroded quality of life while sluggish productivity has impeded growth. Years of austerity have degraded public services. Soaring housing costs have led to rising indebtedness and diminished opportunities, while persistent inequality has broadened the appeal of populism. Even with unemployment at a four-decade low, voter discontent is all too reasonable.

Faced with such challenges — and an ever more statist opposition — the Tories might’ve laid out a bold agenda for improving British capitalism. It wasn’t to be.

Most of the solutions May proposed in her speech on Wednesday were simply timid. She pledged to end austerity, yet also committed to reducing debt and keeping taxes low, suggesting either very modest new spending or very creative marketing. Her housing proposals — making it easier for local governments to borrow to fund construction, taxing foreign buyers of U.K. homes — were reasonable but incommensurate to the scale of the challenge. Her calls for civility were pleasant enough, but highly unlikely to alleviate the “bitterness and bile that is poisoning our politics,” as she put it.

Where May was boldest, by contrast, her ideas would likely make things worse. Her immigration plan would strictly curb the number of low-skilled workers able to enter the U.K., for instance. Yet many British businesses are heavily reliant on such migrants — they make up fully 30 percent of the food-manufacturing workforce, for example — and would likely need to raise consumer prices in response. Moreover, as a recent advisory committee report found, immigrants tend to boost productivity, ease demographic pressure and improve national finances by paying more in taxes than they receive in benefits. Trying to lure more talented workers surely makes sense; keeping everyone else out doesn’t.

Yet more damaging is May’s unflagging commitment to Brexit, which she reiterates at every turn, even as her preferred outcome looks increasingly untenable. By again ruling out a second referendum on leaving the European Union — as much of the public supports, now that the consequences have become clearer — May is effectively promising to impede investment, erode competitiveness, increase consumer costs, worsen regional inequalities, and generally make Britain poorer. In fairness, a resultant collapse in the housing market could well make flats more affordable.

May and her party are right to advance an agenda beyond leaving the Europe Union. But Brexit was, among other things, an expression of voters’ simmering discontent with the way the British economy is working for them — or failing to. Such a stunning result demanded a bold response from the government, something beyond business as usual. It still does.

Editorials are written by the Bloomberg View editorial board.

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