By 8.10am on Friday morning the warnings issued by the doom-mongers of “project fear” already felt somewhat quaint and restrained.
The pound was at its lowest level for more than 30 years, the FTSE plunged as banks and housebuilders were routed, Asian markets nosedived and economists were asking not whether there would be another recession, but how severe it would be.
The noise on Friday morning was deafening, and it wasn’t just that of older generations pulling up the drawbridge behind them.
Making sense of it all was virtually impossible. If there was any consensus in the heat of the moment it was that we are all, to some degree, doomed.
At 6am Royal London Asset Management was already warning that “on the back of this morning’s result we expect the UK will fall into a recession”. Others stopped short of using the “r” word, but interest rate hikes, stagflation, quantitative easing, house price crashes, share price plunges, lower pensions, even higher state pension ages, pension scheme closures, tax increases and yet more welfare cuts were all part of the discussion as the result sunk in.
On social media the hyperbole was cranked up to 2008 levels. Some of it reflected the commentary coming in by email and phone, some of it was simply fuelling panic.
The biggest culprits were those screaming about billions of pounds being wiped off pensions. This is complete nonsense and hugely unhelpful. If you’re retiring next week, intend to take your pension benefits and your fund is still exposed to the stock market, you are indeed up the proverbial creek without a paddle to be seen. Otherwise, there’s no reason to panic about the value of your pension.
There was noise about the housing market too, and about the stability of the banks and the impact of the “inevitable” second Scottish independence referendum.
But it was all noise. The only thing we know for certain is that we’re in for a prolonged and deeply damaging period of uncertainty, building on that created by the prospect of independence and then the EU referendum.
But some things are fairly certain. If you’re wondering how it all plays out in the long term, the clues lie in the response to the financial crisis. Six years ago we saw central banks slash interest rates and launch quantitative easing, while the newly elected Tory-led coalition government seized the crisis as an opportunity to pursue its ideological goal of shrinking the state.
Now we can expect them to double down on all that, with added tax increases. Those most vulnerable to financial shocks and left most exposed by the wrongheaded response to the financial crisis will suffer the most.
The Institute for Fiscal Studies last month predicted that Brexit would add at least two more years to the fiscal consolidation we refer to as austerity. Two years might be wishful thinking, when you look at the likely new incumbents of 10 Downing Street.
The response to the financial crisis helped create the conditions in which millions of people felt – wrongly, as it happens – that they had nothing to lose by voting to leave the EU. One shudders to think what the long-term social and financial cost of Brexit might be.