What’s going wrong with post-Brexit Britain?

Brexit was supposed to liberate the United Kingdom from what supporters of Britain’s departure from the European Union saw as the suffocating confines of the bloc’s regulation. The Brexiteers hoped that leaving would make the country more flexible, faster on its feet and better able to compete in the global economy. But in recent months, that hope has been dashed.

The U.K. has been lambasted as hostile toward business and excessively bureaucratic by a string of major corporations, including Microsoft, as well as British billionaire entrepreneur and inventor Sir James Dyson.

Brexit-supporting bosses of smaller British enterprises have also expressed their disenchantment with the government’s handling of the economy in the three years since the U.K.’s membership in the EU ended.

“I’m rather disappointed to be sitting here today saying that Brexit hasn’t been delivered,“ said Simon Boyd, managing director of John Reid & Sons, a medium-sized steelmaking company in Dorset, England. “We’ve had Brexit in name only. We’re still tied to the EU’s shirttails.”

Boyd is dismayed that thousands of EU regulations that, he said, make his business less competitive than foreign steelmakers remain on the U.K. statute book. These include rules about employment, manufacturing processes and health and safety that the U.K. was compelled to adopt while it was an EU member state. But Boyd maintains they are largely unnecessary and an expensive burden on small and medium-sized companies.

Prime Minister Rishi Sunak had promised to scrap all these rules before the end of the year but has ducked out of that commitment.

“Mr. Sunak said he’s for Brexit. He’s going to reform all these 4,000 regulations,” Boyd said. “What’s he doing? Not a lot.”

The U.K. government has said it needs more time to sift through the laws and that it will scrap 600 of them by the end of the year, but broader concerns about post-Brexit Britain remain.

Leaving the bloc was supposed to wrest back control over British laws, borders and money. The widespread assumption was that this would lead to both tighter controls over immigration and a more favorable environment for business. But, the critics say, that assumption has proved incorrect. Immigration into the U.K. has soared, and in a recent highly controversial decision, a U.K. regulator proved much tougher and more restrictive toward business than the EU’s regulator.

The case concerned Microsoft’s planned $69 billion takeover of the Activision Blizzard video gaming company, which the U.K.’s Competition and Markets Authority blocked on antitrust grounds, while the European Commission approved it.

“The U.K. has taken an even more aggressive anti-tech line than even the European Union,“ observed Matthew Lesh of the free market-oriented Institute of Economic Affairs.

Microsoft fumed that the U.K.’s decision showed that the country was closed for business and opposed to innovation and inward investment. Lesh agreed.

“This is a missed opportunity for the U.K. to differentiate itself from the EU and be somewhere where it’s easier to do business and it’s easier to invest, “ he said.

It’s worth noting that the U.S. Federal Trade Commission has also opposed the Microsoft-Activision deal, but it’s the contrast between the U.K. and EU decisions that has rankled many Brexiteers.

A sharp rise in the level of U.K. corporate tax — up to 25% — has compounded the impression that Britain has become less welcoming for business. Personal taxation is rising sharply too. The problem, according to Ben Harris-Quinney, head of the world’s oldest conservative think tank, the Bow Group, is that a Conservative government has lurched to the left.

“We have the highest taxes in 70 years. We have the highest level of public spending. We have the highest level of regulation. We have the highest level of immigration in history,” he said. “This is entirely the result of a Conservative Party that is not in the least conservative. It should be balancing the books, getting things under control, deregulating and making it easier to do business. But that hasn’t happened since the Conservatives came to power in 2010.”

Harris-Quinney hasn’t given up on Brexit. He believes that by being free to chart its own course, the U.K. at least has the tools to revitalize its economy and its democracy. 

A big part of the problem with Brexit, Harris-Quinney said, had been that the overwhelming majority of Parliament did not really believe in it, and therefore the government has not exploited the opportunity Brexit provided to create a flexible and competitive economy.

“Brexit was really about divergence from the regulatory alignment we had with the European Union. The government has failed to deliver that,” he said.  

The International Monetary Fund has given the U.K. government credit for stabilizing the economy after the wild gyrations of last fall following the “minibudget” of the previous Conservative premier, Liz Truss.

But the vast majority of Brits, according to the latest opinion survey, blame the four successive Conservative governments for mismanaging Brexit. Some 75% of those polled agreed with the statement: “Brexit had the potential to be a success but government implementation made it fail.” And as a result, 56% thought that Brexit was a mistake.