Five years on from the vote, Brexit isn’t even close to being ‘done’
A trade war with Europe, problems with the Northern Ireland protocol, and warships deployed to Jersey: no one put any of that on the side of a bus during the Brexit referendum. Five years on from that historic vote, there is, in fact, still no easy way to discern precisely what Brexit will bring, economically, socially or politically. Besides, as Britain’s continuing attempts to renegotiate the deal demonstrate, we didn’t “get Brexit done”, even half a decade on from when David Dimbleby declared: “We’re out.”
As with all such things, including Britain’s entry into Europe in 1973, it takes decades for the effects to be felt, and even then the dynamic processes can never be complete. This is how it will be with Brexit. So far, though, it’s not so good.
“Project Fear” was the name coined for the effort to make clear to the British people what the financial consequences of Brexit would be. It was meant as derision, but the economic effects of withdrawal from the EU will be damaging indeed. They have already inflicted trauma on parts of the farming and fishing industries, and brought about a loss of investment in manufacturing and in the economy as a whole.
Where the warnings have not come to pass, that should – at least in part – be attributed to the extraordinary splurge of monetary and fiscal support given to the economy in the months following the shock of the vote. More recently, the Covid-19 crisis and some expensive public infrastructure projects have helped take up the slack, and there has been emergency relief for the shellfish trade, for example. Grace periods continue to shelter some businesses from the impacts of change, notably in financial services – but temporarily.
Elsewhere in the service sector, from legal services to data transfers to television programmes, the outlook is getting poorer. It is true that wages are being pushed upwards by the loss of labour, but that will also mean lower profits for businesses, and the potential for higher prices for consumers. There will be losers and winners from Brexit, but the economy as a whole cannot be cut off from its largest market without consequences.
It is also plain that Brexit hasn’t even lived up to the hopes of its most devoted believers. Refugees and migrants are still crossing the English Channel. Even under the restrictive points-based system, the UK is still importing workers because it lacks the numbers with the skills it requires. If people voted for lower migration in 2016, and to “take back control” of our borders, they will continue to be disappointed.
Part of the problem is that the trade deals with the rest of the world, which were supposedly going to be quick and easy to conclude, are nowhere near completion. For all the warm words and wishful thinking, Donald Trump continued on his protectionist “America first” course, and made no exceptions for the UK – before being replaced by Joe Biden. India, the next best target for a deal, is interested but cautious. Nations as diverse as Kenya and Canada have signed “continuation” trade treaties based on the old EU terms, while Japan has agreed a deal that expands on those terms. Only Australia has signed an entirely freshly designed deal.
The other principal economic benefit of Brexit was the freedom for the UK to scale down rules and regulations, the better to promote enterprise and innovation. That freedom, though, continues to be constrained by the treaty requirement to trade with the EU on a level playing field, albeit a vaguely defined one, and World Trade Organisation rules to protect fair practices. Nor, in reality, does there seem much appetite in the British electorate for lower taxes, a smaller state, or a radical deregulation and marketisation of the labour market or public services – indeed, the trend is towards a larger role for the state and less freedom for business.
Last, there is Ireland. There was much nonsense in the aftermath of the 2016 vote about “technological solutions” to the challenge of the Irish border, and protecting the Good Friday/Belfast Agreement. Of course such solutions were never discovered, and the Northern Ireland protocol was the closest thing human ingenuity and the finest minds across the continent could come up with as a solution to the conundrum.
Now, though, instead of trying to make it work, the UK’s chief negotiator, David (now Lord) Frost, is trying to renegotiate it.
Five years ago, the British decided – in as many words – that they would rather like to have their cake and eat it; and, with the self-acknowledged high priest of cakeism ensconced in Downing Street, the quest for that unattainable nirvana continues. That is why Brexit is unlikely ever to get done.
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