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    For many years our two-party system has been fairly predictable: a centre-right Conservative government or a centre-left Labour government, with some times where those parties veered to the margins in opposition.

    To some extent this will have been due to the constraints of EU membership. The EU placed constraints on a UK government's ability to deregulate markets with its minimum standards employment regulation, health and safety, product standards, consumer rights etc. It also placed constraints on being able to use old style interventionist practices like state subsidy of industries, nationalisation, exchange controls. Without the EU shackles there is scope for things we couldn't have foreseen before.

    So here are some thoughts and speculative predictions. I was going to do all parties in one post but it got quite long so I thought I'd separate them out, and will do Labour/Lib Dems in a separate post and focus here on Conservatives.

    Divisions on Europe are over, but other divisions remain

    Although it wasn't in the way Cameron intended, he may have finally got what he wished in getting the Conservative party to stop "banging on about Europe". The case is closed, the Eurosceptics are no longer a faction of the party fighting for control. So this could have lanced the boil that has tormented the party for about 25 years since Maastricht.

    It may not be so easy though. There are still two dividing lines in the party. There are One Nation Conservatives who favour the principle of the NHS, want a reformed but still significant welfare state and access to housing and generally want the party to start reaching out into northern and working class communities. Against them are small-state free-market radicals who see Brexit as an opportunity to set the UK up as a deregulated state able to compete business away from Europe through a low-tax low-spending, low-regulation regime, open to privatising the NHS and more privatisation of schools and universities, scrapping the minimum wage and reducing, annual leave, maternity and employment rights, and further reducing public spending generally.

    The other divide is between socially liberal reformers who follow Cameron's agenda on things like gay marriage, promoting diversity and integration, concern about the environment, and social conservatives who were never comfortable with gay marriage, are sceptical of climate change and want a more authoritarian line to be taken on internet pornography, legal highs etc.

    The pro-Europe v Eurosceptic wings of the party might have some overlap with those factions: One Nationers and social liberals likely to have been pro-European and free-market radicals and social conservatives more Eurosceptic. So old rivalries may remain and some bitterness may fester on the side of the defeated pro-Europeans.

    Risk of post-Brexit economic disruption threatens reputation on economy

    In the short term, the Conservatives face little threat from Labour and Lib Dems so the bigger challenges will come from internal opposition. However, in the longer term there is a huge challenge. We're now 6 years out of a Labour government, and as Brexit only happened due to the will of the Conservatives, if there is a post-Brexit recession or sustained slowdown as feared, it will be very difficult to avoid blame - they can't blame Brexit as this will only fuel the "I told you so's" from Labour/Lib Dem remainers. It will undermine the Conservatives' case for credibility on the economy, especially if we have a stubbornly rising deficit.

    Even the pro-Brexit economists acknowledge that there is likely to be a period of negative shock to the economy even if in the longer term things turn out better - the uncertainty and the fact that we are likely to have to create trade agreements from scratch means we probably can't truly see the post-Brexit UK trading and economic framework till about 2025 to 2030. So there's a risk of the Conservatives doing the hard yards and then the country being tired of them by the time they have in place the framework they want.

    The practicalities of Brexit will absorb the majority of the Conservative administraton's time, constraining space for domestic reform

    The other practical difficulty is that for about 7 to 10 years post-Brexit a lot of Parliamentary and civil service time will be taken up with unravelling 40 years of EU legislation and turning it in to a secure (and presumably better for us) legal framework of UK law, besides negotiating divorce and trading arrangements with the EU and trade with the rest of the world. In general, the UK will have to build from scratch some of its international relationship forums with the rest of the world where it usually goes through the EU. So this limits drastically the time and resource to pursue a reforming agenda.

    Radical change takes a lot of time and energy to drive through: even Thatcher with huge majorities basically achieved three big reforms in 11 years: reduction of trade union power, privatisation and financial deregulation. In Thatcher's last two to three years in office she became increasingly absorbed in Europe, trying to resist monetary union and Jacques Delors dreams of dragging us in to a federal superstate. In these times her focus came off her domestic agenda and she made some bad mistakes on the Poll Tax which led to her demise. We also saw with Tony Blair how his focus on the domestic agenda dropped off post-2001 with the build up and aftermath to the war in Iraq, and Brown became ever more powerful. So there is a risk that as domestic issues pile up: housing crisis, transport reforms grinding to a halt, NHS slowly degrading, the public will start saying "the government does nothing" when in truth the ministers and Parliament are working at an unprecedented level in government to try and build the whole Brexit framework for the future.
 
 
 
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