Boris Pilgrim celebrated the sixth anniversary of the Brexit Referendum last Thursday 4,000 miles away in Kigali, where – incidentally – his government wants to send asylum seekers. There was of course not much to celebrate for the Prime Minister on that day, as the very same morning it become clear that his Conservative party had just lost two byelections to two different opposition parties in two different areas of the country. In the North of England in Wakefield, Labour’s Simon Lightwood managed to overturn the symbolically important Tory majority from the 2019 General Election, giving Labour hope that the “Red Wall” may not be lost for ever. On the same day, further south in Mid Devon, Liberal Democrat Richard Foord achieve a truly historic result by overturning the largest Conservative percentage majority in the previously ‘true blue’ seat of Tiverton and Honiton.
These results have to be seen in context of course. Both byelections were triggered by different forms of (sexual) misconduct by the previous Conservative MPs and in both cases, turnout was relatively low (52% in Tiverton and Honiton and a mere 39% in Wakefield). So, the results should perhaps not be overestimated. Still, coming on the symbolically important date of 23 June, they carry at least symbolic weight by illustrating that the coalition that brought Johnson to power and allowed him to take the UK out of the EU is crumbling on both ends, i.e. in the Red Wall that Brexit has turned blue for the first time in the 2019 GE and in the ‘Blue Wall’ that is supposedly unconditionally Conservative. That will come as no surprise to all but the staunchest reality deniers, as it is difficult to see what good Brexit has done to anyone in the six years since it has become official government policy. But then, the reality deniers are still many.
Brexiter economics
In terms of its economic impact Brexiters are wavering between claiming that the impact of Brexit is easy to assess and obviously positive, as Robert Tombs has recently done, and saying it will never be possible to tell due to the multiple confounding factors at work, as David Frost has done at the UK in a Changing Europe annual conference. Both views reveal the deep economic ignorance – or deliberate obscurantism – of Brexiter economics.
That economic obscurantism was also illustrated in parts of a new report by the Centre for Brexit Policy, which Chris Grey in this week’s Brexit & Beyond blog has done a very fine job deciphering and debunking. Suffice here to just underscore that flawed economic thinking underlying Brexiter views on trade, which are incarnated in the person of economics professor Patrick Minford whose extravagant views on trade policy continue to defy the state of the art in the discipline (I have written about his views before).
Another piece of evidence about Brexiter economic obscurantism comes from Robert Tombs – an emeritus professor of history - who confidently ‘debunks’ ‘Remainer’ arguments about the negative impact of Brexit on the UK economy. His counter arguments against the evidence of a damaging Brexit effect on the UK economy are the usual flawed ones. Most fundamentally, Brexiter economics continue to ignore (or misunderstand) that the relevant benchmark to assess whether Brexit is having a positive or a negative impact on the UK economy is not to cite percentage changes from one period to the other but comparing the UK’s current trends to the counterfactual of a UK that has remained a member of the EU. Thus, Tombs’ argument against the claim Brexit has impacted UK exports is based on the fact that “from January 2020 to May 2022, eurostar freight volumes rose by 5%.” We can discuss the relevance of that single data point more generally, but the fundamental flaw is that however much freight volumes have changed from one period to the other, that does not tell us anything about whether or not Brexit was a success or a failure. The only measure that can tell us that is the counterfactual about what the freight volume (or any other measure of economic activity) would have been without Brexit. Whether or not Eurostar freight volume belie Remainer concerns as ‘project fear’ depends on whether these volumes would have been higher or lower had Brexit not happened.
Comparing actual figures to counterfactuals is of course tricky. Here, Frost is closer to reality when arguing that du to all the confounding factors – such as the pandemic and the war in Ukraine – “it is hard to be confident what if any changes in UK trade are due to Brexit.” Yes, establishing causality based on macro-economic figures is tricky in the best of times. It is even trickier when several other major shocks happen at the same time. It is tricky, but not impossible. The Centre for European Reform has started publishing Brexit impact studies that uses the so-called “Doppelgänger approach” – or by its scientific name the Synthetic Control Method – to solve the issue of counterfactual by comparing UK trends to those observed in most similar cases that are distinguished from the UK by the fact that their relationship with the EU Single Market has not changed.
In his UK in a Changing Europe speech, Frost explicitly rejects that methodology referring to Graham Gudgin’s article on the pro-Brexit Policy Exchange platform. Gudgin in turn presents a series of intuitive objections to the SCM approach related to the way in which the synthetic control case is constructed. Gudgin’s alternative to the SCM, however, seems to be to simply compare the aggregate GDP growth trends across G7 countries by literally eyeballing the yearly percentage change on charts.
Rejecting the attempt to develop a sophisticated method to compare current trends to counterfactuals seems like a great leap backwards in terms of econometric sophistication. Indeed, the SCM is arguably at the cutting edge of empirically investigating causality with econometric methods, for which David Card has received the Nobel Prize in Economics in 2021. While the way the CER implements the SCM approach in its analysis of Brexit may not be beyond reproach, academic studies applying the method to the case of Brexit clearly are without a doubt the most solid empirical studies of the impact of Brexit on UK trade and the economy that we have. For instance the work by Huw Edwards and Mustapha Douch (usefully summarised in their written evidence to the Parliament) shows at least two important things: Firstly, due to an anticipation effect, Brexit started impacting the UK’s trade patterns long before Brexit and indeed the Referendum actually happened; and secondly, that the impact has been underestimated due to the fact that it started earlier than most econometricians expected and because it also affect the trade intensity of EU countries.
In short Frost’s and Gudgin’s attack on the CER studies, while certainly politically motivated and hence independent of the actual methodology they use, is not only insulting to anyone who has spent much time learning statistics and econometrics to improve the ways in which social scientists investigate causal linkages in complex social phenomena, such as trade, but it is also a dangerous form of obscurantism. Gudgin’s suggestion that all we need is some headline figures and excel graphs to compare different countries is the economic equivalent to claiming that all it takes to run a modern society is ‘common sense’ and that any form of expertise is just an attempt by some elite to cloak the pursuit of their selfish interests into scientific-sounding language.
“Funny Numbers”
Despite the continuous denial, the fact that Brexit has failed to deliver was made crystal clear this week by the man whose job it is to hunt for Brexit benefits, namely our Brexit Opportunities and Government Efficiency Minister (BOGEMin) Jacob Rees-Mogg.
Only in a country deeply riven by ideological divides and where public opinion is dominated by a reality-denying right-wing tabloid press can his frankly ludicrous attempts to justify Brexit seen as anything else than an admission of abject failure of the project. In an astonishing interview with LBC’s Rachael Venables he tried to give examples of how EU regulation has had devastating effects on the UK. The example he managed to come up with were the ‘funny numbers’ that we were obliged to have in tunnels due to the translation of distance measures in meters used in EU regulations into yards as applied on UK roads. In terms of economic Brexit benefits, the newest addition to the list of things that have made it worth it is a discount on imported fish fingers (or rather, the alleged avoidance of a 2% increase in their price). Again, only in Brexit Britain can a figure like Rees-Mogg and an official role like that of the BOGEMin be taken seriously rather than something taken straight out of some wired Monty Python sketch.
Other than 2% cheaper fish fingers and tackling ‘funny numbers’ head on, after six years and a lot of searching, the BOGEMin himself has nothing to offer by way of Brexit benefits. While he launched a fierce attack on the Resolution Foundation’s damning new The Economy 2030 Inquiry, he simultaneously refused to commit to his office providing any evidence for the benefits of Brexit, stating that all reports of Brexit damages so far had been ‘bilge.’ Economic reality and statistical evidence are not kind on Brexit and the BOGEMin knows it. But he won’t let that get in the way of his mission of claiming the opposite and therefore has now formalised his previous attempts to get people involved in the Brexit process by telling him which retained EU law they would like to see repealed. This week he launched a shiny new web page called the Retained EU Law Dashboard. On that web page, anyone can click through the various departments and identify which EU directives still are incorporated in UK law. That makes it easy for anyone to tell our BOGEMin which parts of UK law we would like to take back control of as a priority.
This is the clearest sign yet that regulatory divergence from EU rules is increasingly becoming an end in itself rather than a means to an end. Indeed, with economic reality stubbornly resisting Brexiters’ economic strategy of creating economic growth and prosperity by sheer force of will and unbending nationalist optimism, Brexiters seem to start creating measure of Brexit success that they can control directly. The dashboard provides that measurement: There are currently 2,400 pieces of EU legislation still incorporated in UK law. The BOGEMin promises to publish data every three months to show how many changes have been made to these pieces of legislation. Contrary to unemployment figures, real wages, business investments, etc. this is a figure that the government can control as it sees fit. So, we should brace ourselves for regular reports extolling the government’s resolute action in repealing everything European from UK law and claiming that it is working hard on implementing Brexit. But of course, for that resolute action to impact our lives we need to be patient; and while we wait for the UK to recover from EU regulations, we should continue voting for the Tories.
The most worrying bit of the BOGEMin’s approach to regulation is that this week he has shown how very deeply ignorant he is about why any civilised country needs laws and regulations. Thus, he asked rhetorically: “If the equipment is safe and works, why does it need a product specific regulation?” It is not entirely clear whether that statement reflects his own cognitive abilities, or merely how stupid he thinks voters are. Regardless, what it does clearly reveal is that Brexiters deregulation zeal is based on an extremely naïve conception of how modern economies and societies functions (as I have argued many times before, e.g. here). The government’s wilful ignorance of the role of regulations in modern economies also means that the government is setting up the UK civil service for failure. It’s strategy to starve the civil service of funding – in the name of shrinking the state – may very well backfire when it comes to trying and realising any Brexit benefits from regulatory divergence in areas where these may be possible. In other words, it’s hatred of regulations may rob the government of the ability to capture the few Brexit benefits that are up for grabs through reasonable regulatory divergence.
Despite all the silly and at times almost cutely naïve arguments, Brexiters are dead serious when it comes to resolutely pursuing their goal, which increasingly obviously encompasses restraining the most basic rights of British citizens.
Brexit is bad for democracy
As a result of the elusive nature of economic benefits, Brexiters increasingly turn towards other justification for Brexit. Top of the list of non-economic Brexit benefits is its alleged beneficial impact on UK democracy. The gist of that argument is this: Yes, Brexit may not have delivered economically speaking, but it never was about economics anyways, but about freedom, democracy, and sovereignty. This argument has been reiterated again by Rees-Mogg and Frost this week. In his UK in a Changing Europe keynote, Frost stated that: “Brexit is about democracy. That is a crucial test. The few reliable polls about the drivers of the referendum result show that the most important was ‘to ensure that decisions about Britain are taken in Britain’.” Similarly, according the HuffPost UK, the BOGEMin “always thought [Brexit is] all about democracy. Can you change your government, can you make decisions about how you are governed? That is the big and overwhelming advantage of Brexit.” Even Business Secretary Kwasi Kwarteng had to resort to alleged political benefits – in his case the UK’s role in Ukraine – rather than economic benefits to justify Brexit. Other ministers too were struggling to come up with any economic benefits and refer to the repeal of EU law and the new UK ‘Bill of Rights’ that the justice minister introduced this week in Parliament.
Yet, the latter is precisely a prime example that Brexit is not just bad for our economy, but also our democracy. It is the latest and perhaps most symbolic step in how Brexiters are undermining our basic rights. While the UK Bill of Rights is being spun as legislation promoting human rights, in effect it constitutes a repeal – or at least weakening – of the Human Rights Act (HRA) of 1998, which for the first time made the rights enshrined in the European Convention of Human Rights (ECHR) enforceable in UK courts (detailed analysis of the history of the EHRC, the HRA and the proposed Bill of Rights can be found on David Allen Green’s and Mark Elliott’s excellent blogs). The Bill of Rights reverses the achievements of the HRA, making it more difficult and costly for individuals to seek redress for alleged violations of their rights. This continuous a worrying trend that I have written about before and includes the new Police, Crime, Sentencing and Courts Act, which has now become law and was used by Police as one of the first acts under the new powers to seize anti-Brexit protestor Steve Bray’s loud-speaker.
Workers’ rights
Our rights are under attack on another front as well, namely workers right to collective action. Indeed, the past weeks have been marked by what some have started to call the beginning of a summer of discontent. Last week, railway staff walked out for three days of strike and London transport staff for one. This week, barristers – not exactly typical representatives of ‘left agitators’ – went on strike as well. In all cases, working conditions, pay, and job security are at the heart of the dispute. Barristers for instance claim that their real term salaries have declined by 28% since 2006. According to the Resolution Foundation, due to Brexit, things are going to get worse still for UK workers. The next professions to consider industrial action are medics, who also claim real term pay cuts of 30% since 2008 and Royal Mail staff.
Despite the widespread discontent and the evident worsening of working conditions in various sectors that also lead to problems of retaining staff and recruiting to these key positions, the British media have largely used the strikes to bash the unions. A BBC journalist, for instance, challenged the legitimacy of the strike by accusing Kirsty Brimelow QC, deputy chair of the Criminal Bar Association, to make the already stretched criminal justice system ‘function much less well’ (@51’33”) with the industrial action. Conversely, the journalist did not mention consecutive government cuts to the funding of the criminal justice system, which have brought it to the brink of collapse and caused the strikes to begin with. Instead, the focus is squarely on the industrial action and the blame is shoved onto the professionals fighting for their livelihoods.
This is a now familiar pattern. The same discourse of the illegitimacy of people fighting for their living standards and working conditions was widespread during the railway strike – most prominently of course in the right-wing press. The government spent much of the past week calling on Labour to condemn unions and strikes. Shamefully, it succeeded into pushing Labour leader Kier Starmer to ask Labour MPs to stay away from the picket lines and shadow cabinet member David Lammy announced that he would not support British Airways workers going on strike. (Union leaders and some journalists on the other hand did a fine job defending unionism, some of them hitting it out of the park e.g. here and here).
Given the rampant anti-unionism, it is little wonder that the government felt empowered to start an attack on union rights rather than trying to address the very real issue working people are facing. Thus, its response to the rail strikes was a law that allows it to replace striking workers with agency workers, thus considerably undercutting union power.
The government’s appalling hypocrisy – or economic illiteracy – was made worse when Dominic Raab at the same time goes onto BBC4’s Today programme (@8:20:19) to proclaim that the government’s goal is creating a “high wage, low employment economy.” Given that historically high wages virtually always go together with strong unions, the UK government’s anti-unionism seems in direct opposition to its stated goal.* in that context, perhaps the government considering relaxing an EU-era cap on banker bonuses is part of the strategy to make average wages increase (although even the BOGEMin understood that such a move in the middle of a cost-of-living crisis might be ‘insensitive’).
So, six years after the referendum we are facing a situation where Brexit is doing real damage to the British economy, instead of acknowledging that and trying to find solutions, the UK government makes extravagant claims about the positive impact of Brexit on UK democracy, which fly in the face of everything it does regarding our basic rights. The negative economic effects of Brexit are more and more obvious, but as Brexit is increasingly turning into anti-rights Brexit, it is also becoming clear that they may not be the worst effect that Brexit is having on the country.
* Indeed even with reduced power, unions lead to wage premiums for their members, contribute to limiting wage inequality, even though the aggregate effect is positive only if wage increases are in line with increased productivity (see here)