Brexit

Brexit: Britain’s proposed departure from the European Union

The debate in the UK about its proposed departure from the European Union (EU), known as Brexit, is reaching its climax. This page will monitor the points being made by either side in the conflict.

(1) The economic case

Advocates for Brexit have said that the British economy will be much more prosperous once it leaves the EU. It will be freed of burdensome regulations, be able to trade freely all around the world and be able to strike its own trade deals. It will not be subject to being policed by the European Commission and Court. It will be able to give support to industries in need of help and better protect jobs.

The consensus amongst economists, however, is that any form of Brexit will damage the UK economy. A series of economic studies on the impact of Brexit were published at the end of November 2018, just as Mrs May was asking Parliament to approve her deal with the EU:

UK in a Changing Europe (London University)

UK government

National Institute for Economic and Social Research

There have been further official forecasts warning of the economic impact. Here is news of one about the risks of a No Deal Brexit in February 2019. So far, none of the institutions warning about the impact of Brexit have seen a need to revisit their forecasts. Moody’s, the credit rating agency, has agreed that Brexit in any form would propel the UK into recession.

Overall, the consensus seems to be that a “soft Brexit”, staying inside the Customs Union and Single Market, would reduce GDP by 2% by 15 years compared with where it would have been if the status quo had prevailed, a “hard Brexit, outside the two systems but with full trade deal would see a 5% reduction, and a “no deal” brexit, trading on WTO terms, would see GDP reduced by 8%. It is also felt that the much-mooted trade deals with other countries would make only a very small impact. For example a deal with the US would bring in 0.2% in the long term.

The general view is that leaving the EU is economically an extraordinary act of self-harm.

The economic case for Brexit

While it may seem that the consensus is overwhelmingly against Brexit, there are those who are in favour of it. The most obvious sources are Patrick Minford and the Institute for Economic Affairs. Another apologist is John Longworth.

The economic case in favour of Brexit is exemplified in this blog article (by Kent Matthews, LSE blog) here. He argues that a Brexit would reduce prices, free businesses from over-zealous regulations, and allow the UK to redirect the money it currently pays into the EU budget toward more pressing priorities.

Brexiters say that the UK can trade with the EU and other countries on World Trade Organisation terms (WTO) but should easily be able to negotiate a Free Trade treaty both with the EU and with many other countries. The loss of current free trade terms with the EU would in time be much more compensated for by the growth in trade achieved under these new arrangements. You can read more about what trading on WTO terms means here. There is also more about these free trade treaties here.

Controversy over the Brexit dividend and the NHS

One of the most memorable claims made by the Leave side in the 2016 Referendum was that there would be a “Brexit dividend”, that £350m a week that was allegedly being sent to the EU could instead be spent on the NHS. The respected independent Institute for Fiscal Studies, among others, have taken this notion to task. You can read their conclusions here.

Address the decline in fortunes of the “left behind” communities in Britain’s regions

It has been argued that leaving the EU would free up resources to tackle the economic and social decline in Britain’s regions that has occurred in the last 40 years. So far, no policy have been developed or money advanced to address these problems, such as on investment (public and private), skills, regional policy and so on. Government has been far too involved with managing the crisis over Brexit itself. Opponents of Brexit argue that such would be the costs of Brexit that there would be no funds available. Politicians like Boris Johnson have however been saying that they would invest large sums in infrastructure development to benefit the “left behind” regions.

(2) Sovereignty

It’s been argued that membership of the EU has meant a loss of sovereignty for the UK and the Leave campaign promised to “take back control”.

In certain areas, the EU has supreme authority. A principal area it has oversight of is trade and commerce, such as trade with countries outside the EU, the regulation of trade between member states, rules to prevent unfair competition known as competition policy, maintenance of agreed common practices, the customs union, monetary policy for the eurozone

In other areas responsibility is shared with member states, such as agriculture and fisheries, the single market, environment, consumer protection, employment and social affairs.

Other areas still are treated as belonging solely with member states, such as defence, fiscal policy, monetary policy for non-eurozone countries (such as the UK), industry, education, social policy, and foreign policy (although the EU attempts to have an agreed common foreign policy)

You can read read further about how the EU functions here.

Brexiters wish to return control to the UK Parliament and end the role of the EU institutions in UK affairs. Remainers argue that Parliament is always sovereign since it alone can choose to leave the EU. Instead it voluntarily “pools” its sovereignty with other member states in the common interest.

(3) Immigration and the free movement of people

Included in the EU’s core “Four Freedoms” of the free movement of Capital, Goods, Services and People, is the right of citizens of member states to move freely across borders between member states. In the Schengen area, passports are not required to be shown but non-Schengen countries like the UK still retain the use of passports for such travel.

The concern of Brexiters is that this allows for unrestricted immigration and that the UK has seen unacceptable inflows of migrants from other member states, particularly from the former “Iron Curtain” countries of Eatern Europe after 2004. They say that such migration is taking people’s jobs, is overwhelming the NHS and that migrants are a burden on the benefits system. Mrs May has promised to reduce immigration to the “tens of thousands”.

Remainers argue that controls on immigration exist but that the UK has not chosen to use them. They also reply that the UK needs immigration because, with an ageing society, it is not generating enough people to do the work needed, that the UK has a skills shortage that is being by immigration, that many migrants are seasonal workers that do work that Britons refuse to do, such as agricultural work, that there is no evidence of either the NHS or the benefits sytem being “overwhelmed” and that immigrants work and are net contributors to the UK tax system. In others words, they say, Britain benefits from immigration.

It is interesting to note that immigration as an issue has recently reduced in salience in the eyes of the voting public. In the YouGov tracker of the salience of different political issues, in June 2019 immigration had fallen to fifth place in importance, 23% naming it as one of their top three most important issues, compared with 56% in June 2016, the month of the referendum. However, with the threat of Brexit, there has been a big reduction in people coming to the UK from the rest of the EU and many have left.