Sunday, 5 March 2017

Roaming in the rust belt

Sometimes when you go out exploring you find interesting and beautiful places. And then there are times when it's raining and you end up in in Newport. This is far from my first adventure into South Wales though. I've explored the Valleys and I'm now quite familiar with Cardiff. I have big soft spot for Cardiff. It has a real atmosphere and it's alive with history. I think though that on the whole the entire region of the Valleys, Cardiff and Newport can best be described as rust belt.

It is clear that it is still teeming with industry and there's real manufacturing going on all the way along the coast, but at the same time you can see that it is no longer an industrial hub. Like Liverpool, Cardiff is ghost city. Echoes of the past are everywhere and those efforts we see at regeneration are clearly short-lived.

Like Glasgow and Liverpool the waterfront is now home to yuppie shoebox apartments overlooking retail malls occupied by all the usual chain stores. It started in the nineties and carried on through the credit boom. There are new, but mostly empty office buildings all along the quays. This is mirrored in almost every port town. These properties should have attracted commanding rates but in the end regeneration fell flat.

Effectively what we have seen is an engorgement on credit and a real estate bubble - and just ten years on they already look weathered and dated - and worse for the lack of even basic maintenance. Regeneration for the most part was temporary and only a sticking plaster to disguise an overall lack of ideas. It provides a short term morale boost but in the end it does not mask the overall spiral of decline.

I think in many ways this goes a long way toward explaining Brexit. Even now I have remainers telling me that whatever ails the UK economy is not the fault of the EU. I'm not going to argue the toss. We are told that our regions are the beneficiary of EU funding, much of which goes toward propping up these empty regeneration projects but it is doing little to stop the the overall slide.

What these places lack is is a sense of purpose. These cities grew up around heavy industry and global trade. Now they languish as dormitories while funding is allocated to keep them on life support. Meanwhile, food inflation is gradually eating away at disposable income wages are stagnating and working conditions are deteriorating. Something has to change.

In a lot of ways the credit boom was a confidence trick and though most of us enjoyed a few years of financial sunshine, it was largely cannibalisation.

In this it is not surprising that politicians have tried only sticking plasters. Nobody that I know of has any realistic or credible ideas to turn it around. There is no silver bullet and there is no grand design that can save us. The fringe parties like the SNP and Ukip have nothing to offer meanwhile our establishment is too absorbed in London to really notice the problem. London continues to thrive because it continues to suck all the talent and vitality from the regions.

So what does Brexit solve? In and of itself, absolutely nothing. For a time it is going to make matters worse and accelerate the decline. That was never a foregone conclusion. There were ways to mitigate the the impact but the Tories have buried them. But actually the economic shock is what will be the wake up call.

We have a political class that thinks it knows exactly what it is doing, has a blissfully simplistic notion of what Brexit means and unless there is a very long and very flexible transition agreement (which the government does not want) then all the problems are going to land all at once.

This to my mind is a window of opportunity. A chance to stop government dead in its tracks. Brexit means business as usual cannot continue, normal spending will have to be diverted and that is going to cause a reappraisal of how things are funded. Effectively it fucks with the programme in incalculable ways meaning that all the certainties are brought into question. That's when you start seeing serious unlocking of capital, cancelled projects and vanity spending torpedoed. I fully expect the Severn lagoon to go on the scrapheap. The money simply won't be there for make-work non-jobs.

From the outset I predicted a Brexit recession and there is still every possibility that could happen. I expect it will and I think the Tories will make it worse than it ever needed to be. We are going to lose a lot of European trade simply because the transition will be bodged and the systems won't be able to cope. I think that will have a knock-on in the property market where fragile finance and zombie companies will be forced to fold. Just for once, for the first time in a very long time, the cleansing fires of capitalism will be able to do what they are supposed to do. It's a market correction across the board.

In this we are going to see a lot of the regions losing out on funding. That will result in one of two things. Either we will see local politics come alive where the job of councillor becomes a serious one again - and we see fierce arguments with central government, or we will see an agglomeration effect as subsidised regions depopulate and move to the cities. That's going to cause as many problems as it solves. I hope this will trigger a serious debate about the London centric nature of government.

If I'm wrong then Brexit will be far less revolutionary and things will plod on as before in which case we didn't really lose anything, but if I'm right then it is a chance at real economic reform and possibly the opportunity to undo some of the mistakes of the past. I don't know. 

What I do know is that the EU was not answering any of the pertinent questions nor was it offering any solutions. Maybe the problem are insoluble but I would rather give it a try than spend the rest of my days wondering if this dismal swansong of the West is the best we can hope for. Maybe it's time to switch off the life support machine and see if the patient will live.

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