Bill Jamieson
● What has been the real cost to the economy of the vote to leave the EU in 2016?
‘Brexit is our immediate challenge – but it is far from the only one’
of last week, which was rejected by 149 votes” Commons Speaker John Bercow’s bombshell intervention in the Brexit debate
“What the Government cannot legitimately do is resubmit to the House the same proposition - or substantially the same proposition – as that
Still the Brexit argument rages. But on one issue there can be little room for dispute: Brexit – with its three years of acrimony, uncertainty and confusion – has cost us. Damage has already been done.
The searching questions now are how long the damage will continue, what the gains might be once the Brexit imbroglio is resolved and whether the costs can be made up in a post-brexit recovery. And here, opinions are as divided as ever. For there are gains and savings as well as losses.
First, the charge sheet of the Remainers. There is a broad consensus that the UK economy would have been about 2 per cent bigger had the Brexit vote not occurred. The government’s budget deficit would have been smaller and the fiscal headroom for stimulus greater.
Growth is forecast at just 1.2 per cent this year, and even though the OBR predicts a recovery to 1.6 per cent growth from 2021, this is markedly sluggish by previous standards. “The end of austerity,” opined Paul Johnson of the Institute for Fiscal Studies, “could already have been rather more decisively with us.”
But the damage isn’t limited to statistical projections of growth and the cost to the public finances. It is business that has borne the brunt as uncertainty has clamped a colossal brake on investment and expansion plans.
Reading the recent statements from the Scottish Chambers of Commerce and the Federation of Small Businesses Scotland, the words that leap out are “shambles”, “disastrous”, “disruptive”, “frustration” and “dithering”.
Colossal damage has already been inflicted on business confidence and investment planning over the past 33 months. Now the prospect of a prolonged further extension must chill the business world to the marrow.
Many companies have also quit the UK. Bank of America is spending $400 million to transfer its European headquarters to Dublin. Easyjet, the UK’S largest airline, has had to transfer its ownership to nonbritish Europeans. Smaller companies without deep pockets for legal advice — and staff devoted to Brexit contingency planning
— are more or less stuck. They are either running their businesses as usual and hoping for the best, or devoting time and money to stockpiling and other actions with the worst-case scenario in mind.
Investment has plummeted since the referendum. And the reputational damage to the UK will not quickly be repaired. According to research by the Centre for European Reform, Brexit is costing the UK £440m a week – or £26 billion a year.
Here in Scotland, government ministers have lost no opportunity to present Brexit as little short of catastrophic. According to recent pronouncements, the economy here faces losing up to £16bn a year as a result of leaving. It reckons a “hard Brexit”, in which the UK falls back on WTO rules, would cost Scotland up to £12.7bn, while staying in the EU could result in the UK economy growing by 2.4 per cent if integration of Europe’s single market in digital industries, energy and services intensified.
That growth, say ministers, would add about £3.6bn to Scotland’s economy, implying that, overall, leaving the EU would cost Scotland £16bn, or more than 10 per cent of our GDP.
There are lots of phrases such as “up to”, “could” and “if ”, in its confidencerocking critique. But every one of three scenarios – EEA membership, a Canada-style free-trade agreement, and reverting to basic WTO rules – would involve a hit to the economy.
Finally, on stockpiling by firms, Dr Gary Gillespie, the Scottish Government’s chief economist, warns the economy could be hit by a severe post-brexit shock. “Across the four years,” his latest State of the Economy report finds, “the impact of stockpiling has a negative impact on Scottish GDP growth.” Although this will have a positive effect on the economy in the short term, “the repercussions could be felt for years to come”.
Firms may want to stock three months-worth of raw materials and semi-
“Despite this deep gloom, Scotland’s economy has continued to grow and numbers in work are close to all-time highs”
“Theresa May promised to become Prime Minister to deliver what the 17.4 million people voted