‘Billions of pounds destined for the EU have been saved – I’d call that a success’
by Julian Jessop, economist
A decade ago, the British people voted to leave the EU and restore sovereignty to the UK government. Westminster has since regained control over laws and borders, run its own trade policy, and saved tens of billions of pounds in contributions to the EU budget. On this basis, Brexit has been a success.
Indeed, multiple polls show that support for rejoining the EU crumbles when people are presented with the costs and conditions of membership, and that most still want key decisions to be made by politicians who they can actually vote out.
This democratic choice has also laid the foundations for a stronger economy. Benefits can already be seen in many areas where the government has begun to use the Brexit freedoms.
Examples include agriculture, where subsidies are now better targeted, and animal welfare, with UK bans on live animal exports and industrial sand eel fishing.
The financial services sector was nervous about Brexit. But after seeing the benefits from pro-growth reforms, the City is now campaigning against closer alignment with EU rules.
Outside the customs union, the UK has used its independence to secure faster, better trade deals worldwide, and to cut tariffs unilaterally. Outside the single market, the UK has gained greater freedoms to provide state aid, for good or ill, and to reduce VAT.
Looking ahead, there is enormous potential to benefit from smarter regulation of new technologies, including AI. There have already been important Brexit wins in fields such as gene editing.
There have been some upfront costs. Business investment was initially held back by uncertainty after the vote to leave, but it is now recovering as that uncertainty recedes.
New frictions at the UK-EU border have weighed on goods trade, but by far less than feared, while overall trade has been stronger than expected.
It is nearly impossible to isolate Brexit’s impact from other factors, such as Covid and relatively high energy costs. But studies claiming that the UK economy has taken a hit of “as much as 8 per cent” fail to do so miserably.
A more balanced view is that Brexit has had little overall impact, so far. Whether it ultimately leaves the economy weaker or stronger will depend on the choices made by the UK government – which is as it should be.
‘Brexit could have worked if it wasn’t for Donald Trump’
by Sean O’Grady, the Independent’s associate editor
The one thing you probably ought not do is to take the data on, say, GDP growth over the last decade, or since we formally left in 2021, and compare the UK with other comparable countries such as France, Italy or Germany.
That’s because these trends could have diverged anyway for other factors over such a long period – notably different sources, and costs, of energy. We need to know what would have happened if the UK had stayed in on the old terms, and that means doing the kind of econometric exercise that the experts (we’ve not had enough of them) do.
They vary, but the latest is from the Bank of England and it puts the loss at 6 per cent of annual GDP now, and for the foreseeable future. In money terms that means some 6 per cent of our national income (£3.2 trillion), which makes about £200bn – let’s say nearly £7,000 per household.
That could translate into more personal consumption (new cars, holidays), public services (NHS, armed forces) or investment (AI data centres, electric lorries) – or a mix. We could easily afford to upgrade our defences and social care, for example, at that level of funding.
We’d have fewer strikes, fewer hate fulled riots and more stable politics. Sadly, the benefits we get from the TransPacific, Indian, American, Australian and other deals are modest by comparison and will be for a few decades.
Sounds a lot. Is it plausible? Yes, on common sense grounds. First, if you add barriers and thus cost to trade that means less of it, ie less exports. Right now, for example, we’re faced with the EU’s new “Made in Europe” policy, which will be especially bad for the British car and commercial vehicle industry. Free movement of workers (not welfare dependents or “illegals” gave the UK a flexible labour market, eliminating shortages of staff, and which also helped businesses to grow.
Third, look at investment decisions. Do you put your money into a huge single market which, despite its problems, has some fast growing zones and great potential: or the rather stagnant and isolated UK market one-tenth the size? Indeed, investment clearly dropped as soon as the referendum was over, and even a small drop in that crucial metric builds – cumulatively – into long-term loss of productivity gains, wages, tax revenues and living standards. And that process grinds on until the economy fully adjusts to the new conditions – which has been made harder in a more protectionist unstable world.
Brexit might have been fine had the world continued on its path towards freer trade and globalisation, because, as a great trading nation the UK with a fairly flexible and dynamic economy was well-placed to take advantage of that (and why the Single Market was a British-led project). Instead, a few months after David Dimbleby declared “we’re out”, Donald Trump was elected president and the process of de-globalisation and protectionism began.
And it’s not over yet. We are poorer than we would otherwise be, and poorer in relation to our neighbours than would otherwise be the case, thanks to Brexit. That process of relative decline and the social and political tensions that engenders will continue because Brexit is the malign gift that just keeps on giving. No end of a lesson.
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