Matthew Lynn

Windfall taxes imposed overnight. A sweeping programme of nationalisation. A levy on every bank transaction. A campaign on ‘back taxes’ that amounted to little more than hustling money out of corporations. The first couple of years of a government run by Jeremy Corbyn might not be quite as extreme as the all-out assault on private enterprise launched by his hero Hugo Chavez in Venezuela, which included all of those measures. But it would still be most left-wing government seen in this country since 1945, and quite possibly ever. If it happens — and there are still almost five years before there has to be another election — what kind of steps can investors take to protect their wealth? The most obvious is to move as much money abroad as fast as possible.

The exit bill keeps going higher and higher. No progress has been made on the Irish border, and not much on citizens' rights. The talks are deadlocked, and you need an extraordinary level of optimism to imagine that Theresa May talking directly to Emmanuel Macron or Angela Merkel is gong to make much difference to anything. The EU seems completely unwilling to be flexible on negotiating the terms of our departure from the club. The result? A cliff-edge hard Brexit is looking more likely all the time. That might be a catastrophe or it might not. We will have to see if and when it happens. One point should be obvious, however. While there may be costs to that, they are coming down all the time.

Should the exit bill be €20bn or €40bn? Should the trade deal be the 'Swiss-plus' or 'Canada-lite'? Should our negotiating strategy be the full cliff-edge, or should we opt for the reverse gear? If we had a couple of micro-chip factories for every different version of Brexit on offer, we'd probably be worrying about it a lot less. But in fact there is something far more important than whether we end up with a hard or soft Brexit - and that is a quick Brexit. Ask anyone in business - and the debate about how to leave the EU is mostly about preserving the economy - and they will tell you that it is often just as important to get things done fast as to get them completely right. That is why the software industry releases Version 1.0, Version 2.

House prices are in freefall. Unemployment is rising relentlessly. The pound is plunging on the markets, and companies are re-locating to Paris and Frankfurt in droves. In the parallel universe Mark Carney increasingly seems to live in, that is a pretty accurate description of the British economy. In this universe, however, the picture is very different. The economy is doing just fine – and that is making it increasingly hard to understand why interest rates are being held at ‘emergency’ levels to cope with the ‘catastrophe’ of leaving the European Union. At a meeting of the Monetary Policy Committee yesterday, the Bank left rates on hold at 0.25 percent, while hinting that might finally go up next month.

Fifty billion? Seventy-five? In its wilder moments, the FT might even splash on a hundred billion pounds as the minimum cost of our exit from the European Union. As the negotiations over our departure reach perhaps the thorniest issue of all, the final bill will have to be settled. But what should it be? If the hardliners on both side would calm down for a moment, then the answer should be very simple. We should agree to cover the cost of the disruption our departure creates, but only in return for a fair deal on trade. It is probably a mystery to most people why we have to pay anything to leave the EU at all.

We will be hopelessly out-witted by wily Brussels negotiators. We are unprepared for the scale of the task. We are about to be humiliated as we discover just how weak our hand is against a unified European Union that is determined to punish us for our foolishness in leaving the world’s largest trading bloc. The hardcore Remainer commentary on our negotiations over Brexit is so familiar it just about writes itself. But in the last few days, there has been an interesting twist to that script. The UK, far from being the confused, divided and weak partner is the side coming up with the interesting innovative ideas. And it is the EU that looks shackled to a rigid, out-dated structure.

Labour regulations were going to be swept aside. The euro would be reformed, tech entrepreneurs would flock to Paris, and Brexit-fleeing City bankers, flush with tax-free bonuses, would be quaffing champagne in the bars of the Latin Quarter. When Emmanuel Macron was elected President of France, there was a lot written about how he would finally reform the French economy, and restore the euro-zone to healthy growth at the same time. True, plenty of people expected some bruising battles with the unions, some tough negotiations with the bloated public sector, and some fights with Angela Merkel. Whether Macron would ultimately win those was always an unknown quantity. There was one thing they didn’t expect, however.

Output is under pressure. Prices are starting to rise, living standards are getting squeezed, and every day brings fresh stories of one bank or another leasing office space in Frankfurt or Dublin. As the International Monetary Fund downgrades its growth forecast for the UK, whole edging up its predictions for our continental neighbours, Remainers can hardly believe their luck. Finally, all those predictions of disaster are coming true. Indeed, some are starting to describe Britain as the ‘sick man of Europe’ – a particularly potent phrase, since it was precisely to escape that label that we joined the EU in the first place more than four decades ago. The trouble is, there is a problem with taking the IMF too seriously. It is a terrible forecaster.

Who has the most over-inflated reputation in British politics? Theresa May’s air of calculating caution is long gone, no one has believed in Boris Johnson’s connection with ordinary voters for a while, and if anyone still thinks the dwindling tribe of hardcore Blairites blathering on about the radical centre know anything about what is going on they are keeping themselves well-hidden. But for some strange reason, Sir Vince Cable’s reputation for being able to read the economy with lethal accuracy remains intact. To much of the media, he remains the ‘man who saw the crash coming’. As the so-called Sage of Twickenham becomes leader of the Liberal Democrats later today, we will no doubt hear a great deal more about it.

As double acts go, it is probably not up there with Eric and Ernie, John and Paul, or even Liam and Noel. Even so, Mark and Phil, the Governor of the Bank of England Mark Carney and the Chancellor of the Exchequer Philip Hammond, certainly looked today as if they were working in tandem to try and steer the country towards a gentler version of Brexit than some of the harder men of that movement would prefer. Anyone listening to their speeches in the City this morning, postponed from last week in the wake of the Grenfell Tower tragedy, will have seen immediately what they were up to. Carney was at pains to point out that while the economy had been resilient in the immediate aftermath of the referendum vote last summer, there would still be tough times ahead.

Sterling plunges on the currency markets. Middle Eastern oil money flees London. A Prime Minister resigns in mysterious circumstances, and a government clings on to a vanishing majority. Sound familiar? In fact, it is a description of the run up to the sterling crisis of 1976, which forced the Labour Government to crawl to the IMF for an emergency bail-out, rather than 2017. But the parallels are spooky. As a catastrophic election result for the Conservative party is digested, sterling is already sinking like a stone. No one has any real idea who will be PM in a few months, whether there will be another election, or who might win it if another vote is held. We are not about to quite repeat the traumatic experience of 1976.

Sterling plunges on the currency markets. Middle Eastern oil money flees London. A prime minister resigns in mysterious circumstances, and a government clings on to a vanishing majority. Sound familiar? In fact, it is a description of the run-up to the sterling crisis of 1976, which forced the then Labour government to crawl to the IMF for an emergency bailout. But the parallels with today are spooky. As the catastrophic election result for the Conservative party is digested, sterling is already sinking like a stone. No one has any real idea who will be PM in a few months’ time, whether there will be another election, or who might win if a second vote is held.

Friday morning. A humbled looking Theresa May is muttering about how 'defeat means defeat', while Boris Johnson readies his leadership bid. Nicola Sturgeon is flying down to London with a list of demands for supporting a Labour-led coalition. And Jeremy Corbyn is finishing off some work on his allotment before hopping on a bus to the Palace. It might sound far-fetched. But the polls are so all over the place, it is no longer impossible that the Tories will lose their majority. If it happens, one point has been overlooked. Over in the City, stocks will be getting trashed, and the pound will be in free-fall. The markets have only just begun to contemplate what a Corbyn-led Labour Government would be like, but have hardly paused to give it any serious consideration.

Inflation is rising. Real wages are stagnant, and GDP is being revised downwards, putting us down there with the likes of Italy. If Theresa May had a script for the final fortnight of the election campaign it probably didn’t include figures like those. Today’s revision of the quarterly GDP number, down to a sluggish-looking 0.2 percent, from the initial 0.3 percent, will no doubt be seized upon by critics of the government, and by the increasingly battle-weary battalions of hardcore Remainers, as evidence that the wheels are finally coming off the economy, and the impact of a ‘hard Tory Brexit’ is finally being felt. In fact, however, it tells us something quite different. The UK is certainly slowing down in the first half of this year.