Almost 3½ years after Britain voted to leave the European Union, absolutely nothing has been resolved. The long goodbye has left Britons and their politicians divided between Remainers and Brexiters. They have no sense what relationship Britain will have with the EU after Brexit, or whether Brexit will be hard and nasty like a viper bite or soft and gentle like a kiss goodbye.
They have no sense whether their country will remain intact after Brexit – Scotland and Northern Ireland, both on the Remain side, could forge their own destinies. Depending on the outcome of the Dec. 12 election, the third poll since 2015, there is even some chance, though only some, that Brexit will be kicked down the road for another few years or even cancelled. The period between 2016 and today could be called the Lost Years.
What is certain is that the British economy has already made up its mind about Brexit and it’s a big thumbs down. The economy has taken hits since 2016 and the prospects are grim no matter who wins the election.
A Labour win, under Jeremy Corbyn, would install a socialist government with an expropriation agenda in the form of mass nationalizations of trains, water and other utilities. A Conservative government, under Boris Johnson, would deliver a potentially catastrophic hard, or hardish, Brexit while launching a regulatory and tax race to the bottom in his bid to turn Britain into a cold-water Singapore. Either would spend with abandon, based on party platforms and election pledges, potentially trashing Britain’s reputation for fiscal prudence.
No matter what scenario emerges, Brexit would be costly. And for what?
Before the referendum, almost no one in Britain considered EU membership a fighting issue. It simply wasn’t on the agenda, in spite of amusing stories in Britain’s anti-EU press about regulations governing banana curves and other nonsense. Britain had the best of both worlds. It had its own currency, wasn’t a member of the passport-free Schengen zone, and opted out of pretty much any EU legislation it didn’t like, among them security and justice laws. Yet it had open access to the world’s biggest free market. Britain had its cake and ate it.
The then-prime minister, David Cameron, risked all these goodies by launching the referendum on EU membership, for no other reason than to quell a rebellion among the few Tory members who considered the EU a sovereignty-robbing monster (it never occurred to him that Brexit would win).
The British economy did not fall off a cliff after the referendum, but the economy turned sluggish as domestic and foreign companies, faced with uncertainty, put their investment plans on hold. Some big companies pulled out, though none of them was so rude as to blame Brexit for their exodus. Honda is closing its lone British factory, Ford is ending production at its Welsh engine plant and Nissan cancelled plans to expand production at its northeast England assembly plant. Airbus’s enormous wing factory in England, which employs 13,000 and lies at the heart of the country’s engineering industry, is vulnerable. Airbus CEO Guillaume Faury said a no-deal Brexit would be “a disaster” for the company.
Fans of Brexit should not be surprised if British manufacturing gets hollowed out fast if Britain makes a clean break from the EU. Manufacturing is, generally speaking, a low-margin activity that depends on the just-in-time delivery of parts and supplies. Anything that disrupts the even flow, like trucks backed up for hours for border checks, could destroy profits virtually overnight. Under that scenario, why wouldn’t they pack up and leave the country?
In spite of assurances from Tory Brexit fanatics that Brexit’s economic pain will be minor for a while, followed by a great flourishing of trade as Britain strikes deals with all the bits of the planet that used to be coloured pink on the empire maps, the economy is already suffering. This week, the non-partisan and highly respected National Institute of Economic and Social Research estimated that the the economy is 2.5-per-cent smaller now than it was in 2016 because of the Brexit vote, and that Mr. Johnson’s tentative Brexit deal would leave the economy 3.5-per-cent smaller over the long run (gross domestic product shrank by 0.2 per cent in the second quarter, suggesting that Britain may already be in, or close to, recession).
The Institute for Fiscal Studies, an independent British think tank, said in October that “business investment has witnessed the most sustained period of weakness outside of a recession and is now the lowest in the G7.” That is no surprise.
This dire performance is happening even before Britain hits the road. Imagine what will happen under a hard-Brexit scenario. Sadly, even a win by Labour – unlikely, according to the polls – would provide no economic relief. Labour would also pursue Brexit, albeit with the promise of a deal with the EU, and implement tax hikes and a nationalization campaign that could cost £200-billion or more, according to some estimates.
So what has been accomplished by the referendum? Nothing, so far, but political and social division and economic uncertainty that could easily morph into economic calamity. Viewed from afar, Brexit seems so pointless.