It’s still early days, of course, but Brexit is proving, so far, to have been a bad deal for the British economy. And the situation does not seem to be about to get better.
Deeply divided during the Brexit debate, Britons stuck to their respective positions for a long time, until the winning side began to run out of excuses for the country’s difficulties and recently there was growing sentiment of regret that we have quite naturally nicknamed the “Bregret”.
Not yet recovered from their surprise at having decided, by a narrow majority of 52% in a referendum held on June 23, 2016, to leave the United Kingdom from the European Union, 46% of Britons believed, a few weeks earlier late, that the project was a good idea, against 42% who thought it was a mistake (and 10% who dared not say), recalled, last month, The echoes. These proportions changed little thereafter, both during the long and painful divorce negotiations that were to follow and after the effective entry into force of the separation, on January 31, 2020, three years ago this week. But the trend began to reverse last year, to the point where, in November, 56% of respondents to a Yougov poll now spoke of it as a mistake and only 32% as an advance.
It must be said that, if Brexit was supposed, according to its supporters, to be a formidable engine of economic development by freeing the United Kingdom in particular from the regulatory yoke and the European budgetary burden, in addition to freeing it from the obligation to leave its doors open to foreign workers, we cannot exactly speak of promises kept.
The country is the only G7 economy to be still smaller today than it was before the start of the COVID-19 pandemic, recalled at the end of November the FinancialTimes. Just this week, the International Monetary Fund predicted that it will be the only major economy to suffer a recession this year. As for the number of foreigners in the country, it had not decreased, but increased by around 50% last year compared to what it was before Brexit, reported The Economist last month.
In interview at FinancialTimes this fall, Canadian and former Governor of the Bank of England, Mark Carney, put it bluntly as follows: “In 2016, the UK economy was 90% the size of Germany’s. Today it is less than 70%. »
Currency, trade, investment, employment…
This kind of balance sheet and comparison is unfair and overly simplistic, Brexit advocates have been saying all along. It does not take into account, among other things, the uneven effects of factors like the pandemic and the invasion of Ukraine.
Experts have used all sorts of economic models based on the performance of dozens of other comparable economies to estimate the results that a United Kingdom would have obtained if it remained within the European Union. A study by the Center for European Reform concluded that last summer Brexit alone reduced the size of the economy by 5.5%, trade in goods by 7%, investment by 11% and state revenues 8%. Struggling with a labor shortage, the UK also lost 1% of available pairs of arms, according to other calculations, with a net loss of 460,000 workers who would have come from European Union, only partially offset by a net gain of 130,000 workers from other countries.
Brexit’s surprise victory in the referendum also dealt a blow to the pound from which it has yet to recover. This has notably contributed to the rise in the price of imports, and therefore the cost of living, especially in food (+3%), without benefiting British exports, estimated other research, this time from the Center for Economic Performance.
The re-establishment of controls, different rules and red tape at the UK-Europe border seem largely responsible not only for the drop in volume, but also for the variety of goods traded between the two economies (from 70 000 to 42,000), explained in the FinancialTimes in November June Du, an expert from Aston University, Birmingham.
The uncertainty into which Brexit has plunged large companies has led many to delay investments or to look to other destinations in Europe. This was the case, among other things, in the financial sector, which until then had been closely linked to the City of London, but also in the automobile industry, at a time when this industry was beginning its major shift towards electric vehicles, reported in November The world.
Good luck !
But the damage is done. Most opponents of Brexit agree that a rollback is not possible, at least in the medium term. As for his supporters, some are now ready to acknowledge that the separation has not brought the promised benefits and that it is time to tackle his main problems, the daily reported last month. The world in an article entitled “Finally entering the Brexit age of reason”.
We admit, among other things, that it will be much longer and more complicated than what we had promised to conclude new major trade agreements with the United States, India, South Korea or Canada, or even to join the comprehensive and progressive Trans-Pacific Partnership.
In the shorter term, the United Kingdom will have to tackle the “titanic project” of the future of the regulations inherited from the European Union, recalled at the beginning of the year The echoes. At the heart of the so-called corset imposed on the economy are the rules inherited from the period when the country was a member of the EU, whether in terms of working time, maternity leave conditions, standards environmental, electrical safety, food standards, consumer rights or even the accidental capture of dolphins. These rules are enshrined in more than 4,000 laws “which the British will now have to decide to keep, modify or simply delete”, recalled the article.
The case raises all sorts of new uncertainties for businesses and public concern about, among other things, safety and compatibility with the European market. We had promised at the time to carry out this work in 100 days, but we now agree until the end of the year.