Back in the spring of 2016, Leave campaigners branded a series of gloomy, worst-case scenario economic forecasts for the UK post-Brexit as “Project Fear”. Prominent Brexiteers also made it clear that they didn’t think the worst-case scenario was on the table. “Absolutely nobody is talking about threatening our place in the single market,” Daniel Hannan, a Tory MEP and one of the faces of Vote Leave, declared.
These days, everyone is talking about the UK crashing out of the EU without a deal, so while a new report suggesting young people will lose up to £108,000 by 2050 because of Brexit may sound scary, it’s just capturing the zeitgeist.
The report commissioned by Our Future, Our Choice, an organisation campaigning for a vote on the Brexit deal, analyses leaked government documents and considers three different scenarios. In the first, the UK crashes out of the EU and is forced to trade on World Trade Organisation terms. In the worst case scenario of this, young people could lose £108,000.
Don’t melt, snowflakes, it will probably only cost you £76,000, and in the best case scenario that’s whittled down to a tidy £44,000 of money you’ll never have.
The next scenario is the “FTA-style Brexit” – so many choices, so little time! – which is better known as a “Canada-style” deal, where the UK and EU manage to come up with a free trade agreement, which the report predicts would cost millennials around £51,000 (worst-case scenario, £72,000). The final is an “EEA-style Brexit”, aka the “Norway option”, which comes in at a bargain loss of £20,000.
The report, led by University of Oxford economic researcher Tommy Peto, is based on an LSE model from 2017 which considers the impact of a hard or soft Brexit, combined with the analysis of civil servants, and the chances of a post-Brexit recession. It also discusses the loss of EU-funded initiatives aimed at young people, like the Erasmus exchange scheme, the impact on sectors employing young people, the chances of a post-Brexit recession and the return of mobile data roaming charges.
In 2016, the vast majority of young people voted to stay in the EU, and it is of course ironic that they have the most to lose financially from Brexit (according to one study, enough Leavers will have died by 29 March 2019 to create a majority for Remain).
The double irony, though, is millennials already have smaller pensions, larger debts, lower wages, and less secure jobs – and that was the case before 24 June 2016.
The report doesn’t mention the dependency ratio – the number of dependents to every working-age adult – which is projected to balloon without a steady inflow of taxpaying immigrants. Nor does it discuss the fact that, if the last recession is anything to go by, a dip in house prices is likely to benefit cash rich, babyboomer buy-to-let landlords more than low-paid millennials. Or that the interest rate on student loans rises in line with inflation, which is likely to spike if UK imports are subject to tariffs.
Intriguingly, the report references a poll that found nearly half of 18 to 24 year olds felt like crying when they heard the EU referendum result. But Project Fear was already a reality for millennials and their younger siblings. Brexit has made it Project Terrifying.
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