Brexit has made us poorer – but we’re trapped by a conspiracy of silence

Jeremy Hunt’s comments show how far we are from a rational debate about the economic consequences of leaving the EU.

Photo by TOLGA AKMEN/AFP via Getty Images

Economists were almost unanimous in the view that Brexit would damage the British economy, yet for most of the last six years this argument hasn’t made the political weather. There are signs, however, that this might be changing, which poses some difficult questions for our politicians.

The Remain campaign failed to convince the British people of the economic case for remaining in the EU. Then their arguments came back to haunt them. The apocalyptic warnings of George Osborne proved mistaken. The promised Brexit “cliff edge” failed to materialise. As a result, it was all too easy for Brexiteers to discredit not only these claims but also the more credible analyses, which had always suggested that the impacts would be gradual, acting as a drag on growth rather than precipitating an immediate crisis.

It was reasonable to assume that, in January 2021, when the UK left the single market and the customs union, those impacts would become more evident. Yet then the pandemic struck. The short-run economic impact of Covid-19 was far more dramatic than that of Brexit (albeit probably less significant over the medium to long-term). Leavers had no difficulty shaking off the claim that their project was damaging the economy.

Now, however, the situation is very different. While public opinion in 2020 was largely unconvinced that Brexit was responsible for the UK’s economic problems, a significant majority now believe that Brexit has damaged the economy overall, according to polling by Redfield and Wilton for UK in a Changing Europe. More specifically, they also think that Brexit is at least partly responsible for most of our economic ills, from the cost of living to falling wages to our poor export performance. And perhaps more importantly, that in turn has translated into public opinion towards EU membership overall, with polls now showing a consistent majority in favour.

All of this is terribly unfair, according to the increasingly shrill voices of some ideologically committed Brexiteers. And they’re absolutely right. It is unfair to blame Brexit for a cost-of-living crisis driven primarily by post-pandemic dislocation, energy prices and the war in Ukraine, and which is affecting almost every European country to a greater or lesser extent. Insofar as Brexit has played a role in driving inflation – and it has – this has been minimal compared to the impacts of these other factors.

That being said, it’s hard to feel much sympathy for the snake-oil salesmen who claimed that erecting barriers to trade and migration with our largest single trading partner wouldn’t imply large economic costs.

Clearly, none of this justifies doubling down on hugely exaggerated claims of the negative impacts of Brexit, such as Mark Carney’s suggestion that Brexit was responsible for the UK economy shrinking by more than 20 per cent compared to that of Germany. As our recent evidence to the Lords’ Economic Affairs Committee summarised, the impact of Brexit on UK trade is very visible. However, the underperformance of the British economy overall since 2016, while it exists, is still – very much as the pre-referendum analyses suggested – a slow puncture rather than a car crash.

If public views on the economics of Brexit have, belatedly, largely converged with those of economists, what of the politics? The Northern Ireland Protocol Bill and the Retained EU Law Bill are making their way through parliament. In the worst-case scenarios, the former threatens to provoke a trade war with the EU, while the latter – by throwing our domestic regulatory system into chaos – could be the equivalent of declaring a trade war on ourselves. We’ll have to wait and see whether we now have a government that prioritises economic stability over Brexit battles.

Yet even if it does none of this means we are about to engage in a rational debate about the economic implications of Brexit. The Prime Minister claims that he wants to place economic stability and confidence at the heart of his agenda. Yet, so far, he’s dodged this question almost entirely; for example, ignoring the fact the so-called “black hole” identified by the Office of Budget Responsibility is, according to the OBR’s own calculations, to a very large extent the direct result of the form of Brexit he supported. Just yesterday (13 November) the Chancellor, Jeremy Hunt, was adamant in declaring: “I don’t accept the premise that Brexit will make us poorer.”

Rishi Sunak can at least claim that he’s been consistent, albeit wrong, about the economic impacts of Brexit. But for Labour, scarred as it is by the 2019 general election, the contrast between rhetoric and reality is even starker. They are now in the bizarre position of having consistently argued that a “hard Brexit” would damage the economy and yet, despite the fact the public overwhelmingly agrees, having little or nothing in the way of an alternative policy. Their proposals to consider some sort of regulatory alignment for food products could ease issues at the border with Northern Ireland and may even change the mood music of relations with Brussels somewhat, but are hardly going to be transformative.

So, far from Brexit being “done”, we are, if anything, back where we started. The public increasingly seem to have a settled view that it’s not working for us, but politicians are unwilling to grasp the nettle and make proposals that would improve matters. Sound familiar?