The National Institute for Economic and Social Research (NIESR), a serious and well-respected think tank, has published a report on the impact of Brexit so far and, contrary to the IEA’s effort recently, found that Brexit has impacted both trade and GDP. If you remember, the OBR has always worked on the basis that Britain’s GDP would suffer a 4% hit in the long term, taken as 15 years. This was first predicted in 2016 although Brexit actually happened at the end of 2020, so we should expect to reach 4% by around 2035.
The NIESR says we have already lost 2-3% barely three years after formally leaving the EU at the end of the transition period and they think by 2035 we’ll be 5-6% down, about £125 -£150 billion at today’s prices.
Assuming we’ll still be taxing around the 40% of GDP mark, we’re looking at a shortfall in government revenues of £50-£60 billion. You don’t need to be a genius to realise that’s an awful lot of missing money every year which translates into worsening public services higher taxes or any combination of the two. Under the Tories, we'll get more of the former, and under Labour more of the latter.
I tend to believe the NIESR, which is at least consistent with what we can see with our own eyes, rather than the IEA.
I mention this because I noted an essay in Conservative Home by William Atkinson arguing that Brexit isn’t or shouldn’t be about trade at all: Reducing Brexit to trade alone benefits neither Leavers nor Remainers – or the national interest.
Atkinson is Conservative Home's Assistant Editor. He apparently graduated from Oxford in 2021 with a history degree and briefly worked as a teacher in North London before joining Conservative Home in 2022. So, he doesn't have a lot of experience in anything.
He openly discusses the IEA report and talks about the hit to trade but says things haven’t been that bad and it doesn’t help anybody to constantly to keep arguing the toss about it. His final paragraphs are these:
“Sovereignty, immigration, history, our position in the world, economic trade-offs, bendy bananas: these are the issues on which that distant referendum turned. The Government has disappointed (you had one job guys!). But in other areas, the decision to leave has been vindicated. We have proved wrong those who said an independent Britain would be too small or irrelevant to cut its own trade deals – CPTPP, anyone? – and benefited from the vaccine rollout, something that would not have happened without a Leaver government.”
“Brexit is neither the source nor the solution to Britain’s economic ills. Our chronic inability to build on scale or on budget, a sclerotic and growing state, a dependency on mass immigration, unusually expensive energy, a culture of short-termism, monetary incontinence, an opaque tax system: ultimately, these matter more than just how quickly or not UK importers and exporters have recovered from 2019.”
Firstly, Britain hasn’t proved anyone wrong. Nobody ever said we couldn’t cut (I assume he means to negotiate) our own trade deals. What they said is that what trade deals we might sign wouldn’t be as good as the EU’s, and that’s precisely what has happened.
As for the CPTPP, we didn’t 'negotiate' anything. We swallowed 6,000 pages of the already extant and agreed text of the agreement between eleven countries with the potential for trade being about one-fiftieth (even less if the NIESR are correct) of what we are losing by quitting the EU. The vaccine rollout thing has been discredited so many times I won’t bother to do it again here.
The other “economic ills” he mentions need resolving whether we are in or out of the EU and Brexit has hardly helped, if anything it’s made matters much worse. We could have addressed them all at any time while inside the EU without any restraint. Brexit was completely superfluous but has absorbed millions of hours of political and civil service time (and will continue to do so) and has swelled the ranks of government employees doing the work (like trade deals) previously done by Brussels on our behalf.
He is right to point out our economic ills because we certainly have them but hardly any that can't be resolved without money, or where money doesn’t help massively. And trade is how a country generates wealth.
Atkinson quotes an Ashcroft poll just after the 2016 referendum in which voters were asked why they had voted the way they had and apparently only 6% of leave voters did so because “the UK would benefit more from being outside the EU than from being part of it”. I checked the link and it's true.
But against that, the poll also showed for remain voters, "the single most important reason for their decision was that 'the risks of voting to leave the EU looked too great when it came to things like the economy, jobs and prices' (43%). Just over three in ten (31%) reasoned that remaining would mean the UK having 'the best of both worlds', having access to the EU single market without Schengen or the euro. Just under one in five (17%) said their main reason was that the UK would 'become more isolated from its friends and neighbours', and fewer than one in ten (9%) said it was 'a strong attachment to the EU and its shared history, culture, and traditions'.”
In other words, about 39% of all voters (74% of 48% + 6% of 52%) thought trade and the economy were important and I think that number would be even higher today. Rather than being a killer point it simply showed how little leave voters knew about matters of trade at the time. Just ask a fisherman.
And if Atkinson is correct, why did Vote Leave talk about "prospering like never before" (copyright one B. Johnson) and giving more money to the NHS? What was all the talk about 'Global Britain and signing trade deals with the USA and India?
Why does Kemi Badenoch hail worthless Memorandums of Understanding (MoUs) with Florida as having some value and why does @Gully Foyle #UKTrade take to X all day long about how Brexit is benefitting trade - mainly using misinformation?
David (Lord) Frost tweets about needing economic growth to generate resources to build infrastructure:
This is what happens in a zero-growth economy. There isn't enough productive capacity to generate resources to build new things, and what there is has to go on patching up existing things.Eventually, of course, there isn't enough money to do that either. https://t.co/qyigV6kJsA— David Frost (@DavidGHFrost) November 18, 2023
They do it because they all know Brexit is contingent on the Tories showing some practical benefit from leaving the EU single market and unless they can show some quickly, Brexit will be blamed (rightly in my opinion) whether it's to blame or not. And that comes down to money.
Right now, in the expectation of not being able to show any beneficial results, only a lot of damage, it seems to me Brexit supporters are trying to rewrite the very reason behind Brexit and brush under the carpet all the things they promised in 2016, hoping we'll ignore what they said.
Having gotten what they wanted by falsehoods, they now want us all to either forget or forgive and move on. Some hope.
