‘No deal’ Brexit hurts already
NEVER mind Brexit – the economy already appears to be in a slump. Evidence includes a significant increase in the number of people looking for a job in many parts of Birmingham and the West Midlands.
Attention at Westminster has focused on what will happen on October 31, the day the UK is currently due to leave the European Union.
We’ve had two Brexit dates already – March 29 and April 12. But on both occasions, the UK asked the EU to agree to a delay.
This time it could be different.
Boris Johnson, the new Prime Minister, has insisted that he will take us out of the EU on October 31, come what may. That could mean a “no-deal” Brexit, which many employers say would do their businesses enormous harm.
It’s easy to understand why people are asking what the future holds. But the economy appears to be in trouble now.
For example, the number of people claiming unemployment benefit has increased dramatically over the past year. In the Birmingham Ladywood constituency, the number claiming either Jobseeker’s Allowance or the job seeker’s element of Universal Credit rose by 1,620 over 12 months.
That’s up from 6,880 to 8,500.
It means around one in 12 of all people aged 16 to 64 in the constituency are now claiming. Looking at men specifically, one in ten are now seeking work.
In Birmingham Hodge Hill. the number of claimants rose by 1,180 over 12 months to reach 6,035, and in Birmingham Erdington, the number rose by 1,030, to reach 5,015. The number of claimants in Birmingham Perry rose by 1,015 to 5,255.
These are huge increases. In Erdington, for example, the number of claimants was up by more than a quarter.
As is so often the case, the figures are not entirely straightforward.
Some claimants who switched from the old benefits to Universal Credit might now be required to show they are looking for work when they didn’t have to before, which would mean they are now counted as jobseekers.
And if a person was to start looking for work when previously they were happy without a job – such as a full-time parent whose children are now grown up – then they might be added to the figures. It doesn’t necessarily mean their circumstances have changed for the worse.
But given the size of the increases, it seems clear that something unfortunate is happening in the jobs market.
Across Birmingham as a whole, 46,270 people are claiming benefits for jobseekers, an increase of 9,265 people over 12 months. That’s an increase of 25 per cent in one year.
In the United Kingdom as a whole, the figure is 1,143,225, up by 253,360 in one year.
Jack Dromey, Labour MP for Erdington, said Brexit may be a factor, even though we’re still in the EU. That’s because the uncertainty of not knowing if and when Brexit will take place has made firms reluctant to commit to spending.
He added: “Secondly, the more general point is that the economy is starting to weaken. We’ve had eight years of economic growth when the economy has generally done well, even though it has left behind millions of people.
“But the economy is now weakening. So what we have is a combination of Brexit uncertainty and the economy weakening.”
Khalid Mahmood, Labour MP for Perry Barr, highlighted cuts to skills funding. He said: “Cutting further education funding has made it harder for people to get the qualifications they need to get into employment.
“They have cut support for English as a second language, so people who might have been able to train and make themselves viable in the jobs market are not able to do that.”
It’s not just Labour MPs who believe the economy is faltering.
The Treasury’s official watchdog, the Office for Budget Responsibility, has warned that we might already be in a recession (defined as the economy growing smaller in two consecutive quarters).
It said the economy appears to have shrunk in the second quarter of the year, from April to June.
That could mean one of two things. It’s possible that fears about Brexit may have led businesses to stockpile goods earlier in the year, which meant demand for products fell as firms used the stock they had in storage.
Alternatively, according to the Office for Budget Responsibility, the economy may simply be going downhill.
It said in a report published in July: “The latest data and surveys suggest the economy flatlined at best in the second quarter.
“Some of this is likely to be a ‘payback’ after Brexit-related stock building in the first quarter. But surveys were particularly weak in June, suggesting that the pace of growth is likely to remain weak. This raises the risk that the economy may be entering a full-blown recession.”
And it said that the UK economy was affected by global issues unrelated to Brexit.
“Manufacturing has also weakened globally, reflecting factors such as the introduction of tariffs by the US and China.”
Make UK, the body that represents manufacturers (previously known as the Engineering Employers’ Federation), also believes the economy is in trouble.
It warned on August 1: “The UK economy is undeniably on a downward trajectory with output, new orders, and employment all falling again. Companies are cutting back on both day-to-day spending and capital investment as the downturn in activity continues, reflecting growing fears of a crashout Brexit and worrying global trade conditions.”
Even supporters of a no-deal Brexit tend to agree it will cause some harm to the economy, at least in the short term. So it’s obvious why people are asking what will happen after
October 31.
But there are also grounds for worrying about the state of the economy right now.
The economy appears to be in trouble now