Despite a few maybes and minor positives, this article by the BBC clearly leans towards the conclusion that Brexit has had a significantly negative impact on the UK economy. No wonder Leave supporters distrust its neutrality.
https://www.bbc.co.uk/news/business-64450882
“What impact has Brexit had on the UK economy?”
Quotations from the BBC’s report are in black, italic and between quotation marks. Our responses are in green.
“Trade”
“There was an initial dip in the amount the UK exported to the EU. Once teething problems were dealt with trade volumes recovered to pre-pandemic levels, according to official figures. But it could be argued trade might have grown more if it hadn’t been for Brexit.”
This probably implies that it should be argued that trade would be higher if we hadn’t left the EU. That might even be true at this stage but can’t be proven, however this full trade recovery is far from the rampant, gloomy predictions made prior to leaving.
“It is a similar story for imports – volumes have recovered to pre-pandemic levels. But academics at the London School of Economics point out that the price of food imported from the EU – the likes of tomatoes, or potatoes – rose, maybe by as much as 6% over 2020 and 2021.”
Is that because we imposed tariffs or extra bureaucracy, or is it due to EU inflation (food prices have risen more in the EU than the UK since 2019), or is it because of sterling devaluation? Brexit critics usually claim it is caused by the folly of leaving but it is probably more complex than that.
“On the flipside, that has made it easier for domestic food producers to compete; economists say they may have had a £5bn boost.”
That’s not a minor positive but a boost to GDP and to an undervalued sector as well as an increase to food security.
“Most nations saw international trade collapse at the height of pandemic. Since then, the rest of the G7 countries have seen trade, when compared to the size of their economies, bounce back in a way that hasn’t happened in the UK.”
Is that Brexit again? Our trade with the EU has recovered, our productivity hasn’t improved but this was an issue before Brexit. Could it be that tax policies (energy windfall, non-doms, corporation tax and the freezing of various tax thresholds) have harmed investment? These policies seem more likely to be pandemic-recovery related, to bring down debt that wasn’t caused by leaving the EU.
“If you look at the UK’s trade with the rest of the world, as well as trade with the EU, overall it has fallen relative to the size of the UK economy.”
Which rather confirms that trade barriers with the EU are not the problem and that the answer above is more relevant. This paragraph doesn’t say the fall is because of Brexit but the essay is about its impact on the UK’s economy so that is exactly what the BBC wishes us to see.
“In total 71 trade deals have been struck, which is swift progress, but the vast majority just replicate deals Britain had when it was part of the EU.”
So we haven’t suffered in this regard.
“Talks are still taking place with India and members of a trans-Pacific pact. They are taking longer than previous ministers had hoped – but analysts think that taking things more slowly may actually lead to more beneficial agreements.”
Instead we could have been waiting, and waiting, and waiting for Brussels to join the Trans-Pacific Pact (CPTPP) – if ever.
“Trade deals with some of the biggest players, such as the US and China, remain elusive.”
As they are for the EU. So again, so what? Note too that the US really needs to join CPTPP (Trump withdrew from negotiations) to cement relations with allies against malign Chinese behaviour and ambition in the region; if both the UK and US become members then pseudo-Irish President Biden will have bowed to today’s real issues. [Biden]
“Investment”
“… it has been three years since the UK left the European Union. Since then there has been a pandemic, swiftly followed by an energy crisis. That has made it hard to decipher exactly what the impact of Brexit has been.”
Frankly impossible, since these factors have had an obvious and huge impact that masks the Brexit factor. It is likely that Brexit is another uncertainty affecting decisions to invest but it might not matter much if the UK looked attractive to investors in other ways, like the return on investment after tax. Actually UK investment and productivity have been poor since the Global Financial Crisis of 2008, which therefore can be proven not to have been caused by Brexit.
“The latest data suggest a hit to the economy – but in some unexpected ways.”
“… investment has stalled since the referendum, as businesses remain wary of the outlook for the economy. Investment wasn’t great even before 2016, but if it had continued its pre-referendum trend, analysis by the think tank the UK in a Changing Europe suggests it could be about 25% higher than it is now.”
Which implies that Brexit trashed that trend, but lockdown also happened after 2016 – not a good time to invest. Of course three years of stasis on Brexit plus another three years of little action or vision on what follows hasn’t helped.UKICE (UK in a Changing Europe), is notoriously anti-Brexit.[1]
“Jobs”
“A study by the think tanks Centre for European Reform and UK in a Changing Europe suggests that there are 330,000 fewer workers in the UK as a result of Brexit. That may only be 1% of the total workforce – but sectors such as transport, hospitality and retail have been particularly hard hit.”
Many fruit pickers, barmaids, builders and plumbers may be back in Bulgaria, Estonia, Poland or wherever and Freedom of Movement may play a part. However, millions of EU citizens were granted ‘settled status’ after Brexit, thousands of Albanians and other illegal immigrants have since arrived, plus there are the around half a million oldies who haven’t returned to work since covid. The reasons for the shortfall are plainly not all due to what these ‘think tanks’ think and the BBC should think too before reporting this uncritically.
“Meanwhile, in the financial services sector, 7,000 jobs may have been lost, according to a House of Commons report, but that’s far fewer than the 70,000 previously feared.”
Which proves how dodgy so many of these predictions are.
“What next?”
“All of the above adds up to an economy that has fared less well amidst the recent upheaval than its peers. The UK is the only major rich economy that remains smaller – poorer – than prior to the pandemic and Brexit may be a factor.”
There are other important (far more important) factors that have affected the UK more than most – it is more dependant on gas and had a greater lockdown, for example. Once again, they want to direct – or re-direct – the thoughts and beliefs of their readers/listeners.
Our Conclusion
Most commentators reveal some bias but our publicly-funded, national broadcaster ought to be more careful about promoting dismal forecasts while ignoring others that are more positive. BBC News reported the IMF’s prediction that the UK’s GDP would fare worse in 2023 than any other member of the G7 (the IMF didn’t expect the UK to grow more than the others in 2022, which it did). The IMF was much more positive about the longer term but this did not feature in the News, at least not clearly if at all:
Note that the UK will apparently out-perform the EU, not that the IMF has proven to be a very reliable predictor. Between 2016 and 2024, according to the OECD, Britain’s growth will almost exactly parallel that of Germany and this is how it looks so far:
Remaining in the EU does not appear to have performed the magic for Germany that so many think it would have done for us. Britain has its own special problems that pre-date Brexit and should not be attributed to it: would the over-50s rush back to work if we re-joined the EU or is it too late?
This EU Won't Work 