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Brexit-bashing is in vogue. For a government whose response to every failure is a variant on ‘It wasn’t me, Miss’, Brexit is the irresistible scapegoat. Perhaps it is just another example of this Labour government’s rather infantile resort to fibbing. Or, even more worrying, they might really believe the rhetoric: that Brexit really is the cause of our economic sluggishness and that aligning with the equally sluggish EU will miraculously shower us with wealth. It’s a ‘cargo cult’, like the touching Melanesian creed that one day a deified Prince Phillip would fly in with a plane-load of goodies. How this would happen is never clearly explained. For example, the government assures us that adopting EU food regulations would benefit our exporters and bring in an extra £5 billion a year. But we only export about £10 billion in agricultural products to the EU, and much of that is whisky and biscuits. But the EU exports £54 billion of expensive and often poor quality food to us. Who would gain more from a deal? Ah, but it will bring down prices, we are told – something that importing better quality food from Australasia could have done, but we were told that doing that would be bad for farmers. So Irish beef good; Australian beef bad.
‘Project fear’ has been the staple of Brexit-bashing for ten years now. Economists threatened immediate disaster as soon as we voted to leave. Sundry economic lobbies made a range of predictions and they averaged out at what became an article of folk wisdom: Brexit would shrink the economy by 4 percent. The argument is invariably garbled, but true believers keep hold of the 4 percent figure, which they trot out as holy writ. It was based on the idea that Brexit would lower ‘trade intensity’ and that this would reduce productivity. The theory was always speculative, and reality did not obediently follow the prediction. So labour productivity growth in the UK since 2016, though alarmingly poor, has been higher than in Germany, France, Canada, Italy and Japan. And economic growth in the UK since Brexit has been higher than in Japan, Germany, Italy and France. So that 4 percent fall remains a figment of Remainer imagination.
Brexit, we are repeatedly told, has been disastrous for our exports. Aston University produced a report led by a Chinese economist showing precisely this. The Financial Times, the Guardian and the BBC predictably trumpeted it as a clincher. A closer look at the report shows many embarrassing errors. Among our exports supposedly devastated by Brexit were camel meat and tropical nuts – which had simply been reclassified as re-exports. Exports of aircraft landing gear, said Aston, had stopped altogether. In fact, they had just been given a different code number.
When facts do not match theories, there is a choice: change the theories, or change the facts. The latter is the preferred Rejoiner option. The best way of changing the facts is by ignoring what has actually happened, and producing a hypothetical version of what might have happened. Rather than comparing Britain’s economic performance with our main EU neighbours such as Germany and France – which might seem the obvious thing to do – they compare it with a basket of other countries. The result you get depends on which countries you choose as a comparison, or ‘doppelganger’ as it is known in the trade. This has been done again recently by an American think tank, the NBER, who have actually managed to double the hypothetical Brexit penalty from 4 percent to ‘up to 8 percent’ – a result greeted with glee by anti-Brexiteers as evidence of ‘economic disaster’. Merely rejoining the customs union, claim the cargo cultists, would shower us with billions.
The NBER got their result by comparing the UK with an odd doppelganger group including Estonia, Latvia, Iceland and above all the USA. The USA, due to the highly expansionary policies followed by its recent governments, has rapidly outgrown all other developed economies, so using it as a comparator guarantees showing Britain’s performance as poor. But it would also show up the poor performance of Canada, Japan and above all the EU, which is after all the issue. So if you believe anything like this 8 percent figure – as Labour and Lib Dem commentators claim to - you are believing that simply being in the EU, or even half in it, would somehow give us much faster growth than any of its actual members. Smoke and mirrors are here being energetically deployed. The reality is that Brexit caused some fairly small losses in the short term, but these effects seem to have disappeared. There are doubtless small companies who lament the extra paperwork, which is largely a consequence of EU intransigence. But for the economy as a whole, any effect is hard to detect. On the plus side, however, Brexit has permitted trade agreements with other countries, for which this government brazenly claims credit. And above all we have avoided paying a huge sum in EU budgetary contributions – enough to dig the Chancellor a very deep ‘black hole’ of £30 billion plus, and a real one this time.
There are several reasons why we have to contest ‘Project Fear’ reiterations. They are being used as an excuse to push us into dependence on the EU by stealth, and thus overturn a major popular decision without public debate and certainly without a vote. This is the EU’s way with democracy, and it seems to be our present government’s too.
Using Brexit as a scapegoat also hides the real causes of our undoubted economic woes. Raising taxes on business slows economic growth. Mass immigration of low-skilled workers and their dependents inflates welfare costs, hampers productivity and reduces per capita GDP. None of these factors, strangely enough, merits the attention of the NBER. Yet every one of our four main exporting industries -- oil and gas, chemicals, aircraft parts and luxury cars -- has been directly or indirectly hammered by government policies. Refusing exploration licences, imposing ‘windfall’ taxes, forcing the adoption of electric cars and pushing up energy costs to uncompetitive levels– these things, not Brexit, are ruining our key industries. Adopting further EU taxes and regulations will for many firms be the last straw. Never mind: Remainers will be happy.
