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By Jason Michael
THERE IS NO GOOD WAY to say this, so we might as well just cut to the chase: Brexit, no matter what form it takes, is going to be an unmitigated disaster. Don’t take my word for it. Take the word of the British government, which yesterday published its own 90-page economic review of the horror show that leaving the European Union will be for the United Kingdom over the next 15 years. The purpose of this document, EU Exit – long-term economic analysis (November 2018), is to provide “Parliament and the public with an assessment of the possible long-term economic impacts of the UK’s future relationship with the EU.” But before we discuss this further, we really must think about this; the British government has furnished parliament and the public with a 15-year economic forecast in just 90 pages. That, to put it in perspective, is a document, written in the most opaque language, of about half the size of an undergraduate dissertation (typically written by 21 year olds) – outlining the possible consequences of the UK leaving the EU over the next 15 years.
Once this information has sunk in, we should note that the analysis – if we can call it an analysis – is divided into four scenarios; that is the no-deal model, the Free Trade Agreement model, the European Economic Area model, and the White Paper model. So, ranking these models in terms of likelihood, we have the probable no-deal scenario, the slim-chance that something might work scenario, the Hail Mary scenario, and the not-a-snowball’s-chance-in-hell scenario – meaning that only just over 22 pages of this so-called analysis are of any practical use. Considering that Theresa May’s draft proposal amounted to 585 pages, a text which merely attempted to agree on certain terms of engagement pursuant to a full agreement, we are left with the distinct impression the British government never really put its back into these calculations.
Scouseweegian 🤦🏻♀️🏴 (@scouseweegian) November 28, 2018
Hidden in this are some pretty sobering predictions. The worst-case scenario is dire, with GDP – the measure of the entire economy – estimated to fall by 10.7 per cent. The best result the government modelled predicts an almost 2 per cent fall, but that best-case scenario – the White Paper model – is included only for decoration. As things are, the British government can only dream of an economic hit this low. The reality is that leaving the EU, according to the government’s analysis, will result in the UK economy shrinking by between 10.7 and maybe 8.1 per cent in a possible Free Trade Agreement outcome. Everything else is pie in the sky. The bottom line, as senior members of the Conservative Party have now conceded, is that there is no good Brexit scenario.
These numbers may mean very little to the ordinary Joe or Jane reading this, and that is perfectly alright. Numbers are boring, not all of us enjoy mathematics – never mind economics, and this is precisely what the government is banking on. We are supposed to see these numbers, listen to terms like “negative growth,” and duly tune out. But GDP is important. The growth or shrinkage of the economy is the difference in paying more or less tax, earning more or less wages, and, in many cases, the difference between being employed and not. GDP – or Gross Domestic Product – is a measure of the size of the entire economy, how much wealth we are all producing. A 10.7 per cent fall in GDP is catastrophic. Even an 8.1 per cent fall (the probable best-case Brexit scenario) is abysmal. In the first three months of 2009, at the height of the last big recession, GDP fell by only 2.6 per cent – and we all know the havoc that wreaked in the UK and in all of our lives. The depths of that recession, according to this government assessment, will only be a fraction of the pain that is coming.
The British government is expecting the entire UK economy to dive four times deeper over the 15 years after Brexit than it did during the last recession. Will it recover, we might ask, after those first 15 years are over? No. There is no reason to imagine it will. Removed from the wider European bloc, it is likely that over a protracted period the British economy will sink to a new normal. This much was predicted some time ago by arch Brexiteer Jacob Rees-Mogg when he admitted that the recovery after Brexit may be 50 years down the line. Outside the EU, the UK economy – deprived of the real benefits of free trade with markets the length and breadth of Europe, deprived of access to global markets with which the EU has collectively brokered special arrangements, will naturally continue to shrink for decades until it reaches the level appropriate to a small, isolated island economy.
Tommy Sheppard MP (@TommySheppard) November 28, 2018
In real terms, then, the 66 million people of the UK will be trapped in an economy which is continually haemorrhaging wealth for perhaps the next five decades or so – continually getting poorer, the standard of living continually falling, and the squeeze on government social spending continually getting tighter. In 2034 the UK, as the government is telling us in this report, will be a far poorer place. Coupled with an ageing population over this period, it is unlikely in the extreme the NHS and other much needed social services will survive. In 2069 we are probably looking at a UK which more closely resembles Poland in 1970 than a modern, reasonably prosperous EU member state. This is far from “Project Fear.” This is the government’s own projection.
This is the part where I am expected to offer a conclusion, but that has already been done in the introduction. There is no good Brexit. The most likely outcome we are facing is one in which the entire economy continues to deflate over the course of the rest of our lives. We – people of my generation – are already poorer than our parents were when they were our age. Now our children will be poorer than us, and their children poorer than them. Those running the country and people of their social class have spent the last three decades feathering their nests. Their wealth has been off-shored to island tax havens where it can’t be taxed to fund the services we so desperately need. We have been robbed blind, and now we are faced with having to pay an unimaginable price for not having stopped them while we could. All that can be added to sum this up is the fact that right now we still have the opportunity to off-shore ourselves. Either Scotland gets moving with independence, or my advice is that we get out of the UK while we still can.
UK will be ‘worse off under every Brexit option’