As if the reinstatement to the Cabinet table of disgraced former Defence Secretary Liam Fox were not bad enough, his off-piste excursions have proved to be sources of significant embarrassment to Theresa May as Fox, along with the rest of the “Three Brexiteers”, David Davis and London’s formerly very occasional Mayor Alexander Boris de Pfeffel Johnson, are meant to be charting Britain’s path out of the EU.
When will it finally be Goodnight From Them?
So in order to get his message across, Fox went last Monday to address the CBI’s Presidents’ Committee, and during his address, he once more opened mouth and inserted boot in no style at all, causing his audience to be so displeased that they declined to offer him the usual round of applause afterwards. Worse, the right-leaning press has been conspicuous in its absence when it comes to reporting the incident.
Fortunately, ITV’s political editor Robert Peston was on hand to bring the story to a wider audience, telling “If Liam Fox set out to alienate and upset business leaders, he probably could not be doing a better job of it … First he characterised them and their outfits as fat and lazy … Now I’ve learned that he shocked a group of them, brought together by the Confederation of British Industry (CBI), when he said they should place more of their capital outside Britain”. That’s stupid for a number of reasons right now.
One head of a major UK company observed “Right now we need as much investment here as we can possibly get, to prevent a rise in unemployment - which is what many of us believe will be the painful reality of leaving the EU … Few of us could really believe that he was telling us to invest more in other parts of the world. There was a real sense in the room of 'this is bonkers’”. Peston explains why this should be so.
“We are suffering from a record 7% current account deficit - in part because UK businesses and institutions are no longer earning as much as they did on their overseas investments … Whereas foreign companies with operations here are taking more profits out of Britain than in the past”. And he sums up succinctly.
“Most economists would probably agree with Mr Fox that over the long term it would be helpful to the UK if British companies increased their stock of productive capital abroad … But to do that on a large scale now could be seen as potentially triggering a balance-of-payments and sterling crisis, because it could be seen as a vote of little confidence in the prospects for the UK of our indigenous businesses”. Quite.
Moreover, with Sterling having fallen by well over 10% since the referendum, investing abroad is now more expensive. As Peston points out, successive Prime Ministers from Mrs T onwards have tried their best to get foreign companies to invest in the UK. Flight of capital from those companies would be bad enough: to have UK businesses join in, with the economy in a potentially parlous state, would be suicidal.
Liam Fox was terminally damaged goods five years ago. Nothing has changed.