Inconvenient truths

A recent piece of research has broken down the expected impact of brexit by industry sector and by political constituency (http://cep.lse.ac.uk/pubs/download/brexit10.pdf). Not surprisingly the economic impact is negative, no matter where you live and no matter what type of brexit. The economic argument has always been clear.

People who voted ‘leave” voted for other reasons.

And yet whatever those reasons were, they seem doomed to disappointment. We were told that the main reasons given for voting leave were “immigration” and “sovereignty” with a vague suggestion of “control” coming in as well.

Let’s assume that immigration may or may not be related to dog-whistle racism. Let’s assume that “control” means control over the numbers of immigrants entering the country or control over the laws enacted within the UK. Will this brexit deliver what these voters have asked for?

Start with the basic fact that most immigrants to the UK are not from the EU. Most immigrants enter on visas from outside of the EU, either work visas or student visas. This matters because research has shown that in fact the voters of the UK vastly prefer EU ie. white immigrants to non-EU immigrants, though ‘leave” campaigners vigorously deny racism (http://blogs.lse.ac.uk/brexit/2017/06/05/uk-voters-including-leavers-care-more-about-reducing-non-eu-than-eu-migration/)

The long term net migration for non-EU migrants is around  175,000 according to the ONS (https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/may2017) which makes a mockery of the Tory “target to reduce all net migration to the tens of thousands.

Any proposed immigration controls currently being suggested by the government, were ones available within the EU anyway. EU freedom of movement has always been in service of work and industry. An example might be Belgium’s immigration practice of deporting any EU citizen who hasn’t found a job within three months – all perfectly consistent with the EU rules.

The ONS figures see a fall in the rate of immigration, largely because EU nationals have started returning to their country of origin and fewer are arriving in the UK to take up jobs. It seems likely that a reduction in the increase of immigrants will continue, but that the overall number of immigrants here will still increase i.e. if people voted leave to reduce the number of immigrants they will be disappointed. They have been taken for fools.

So what about those people voting to ‘leave” the EU on the basis of sovereignty? Interestingly the recent Conservative White Paper makes clear that sovereign power has always resided within the UK. The arguments over exercising Article 50, have largely been one of sovereignty, where the government has sought to undermine parliament and grab power for the executive, suggesting that if anything the brexit process could have led to a reduction in parliamentary sovereignty without the intervention of the judicial system. That argument continues with the parliamentary tussle over executive powers when drafting the upcoming Repeal Bill.

Aside from being an incredible example of double-speak (what kind of repeal involves taking each and every part of EU legislation onto British statute books?) there is considerable anxiety within parliament at the scope of cut and paste required to complete the stated objective of this piece of legislation, plus a real sense of distrust that maybe, the government will take this opportunity to change the law rather than just transfer it by perhaps deliberately forgetting to transfer key pieces of protective legislation around workers rights, environmental protections etc.

Let us assume that the government sets out to do exactly what has been described. No one actually knows the extent of legislation that the EU has passed and it’s implications for the UK statute book, because no one has ket a record, There was never thought to be a need. So there is a very real risk that pieces will be left out by accident, and will only be identified when something goes wrong down the line, requiring the attention of the courts and possibly parliament to rectify.

Let’s assume that the UK government, despite the logistical hurdles, manages to transfer each and every piece of EU law onto our own statute book. Does that give us sovereignty in any meaningful sense?

In order to change statute, there must be cross-party support, unless the government of the day has a stunningly large majority and consensus on the topic. The chances of this happening on significant EU legislation are vanishingly small. The UK has always been and will always be, really really bad at revising statute. So actually taking this law onto our own statute book makes it practically impossible to change any of it.

Furthermore if we want to continue to trade with the EU, and as our single largest trading partner we’d be stupid not to, then each and every piece of ew legislation relating to trade etc. will have to be implemented on our own statute book. Leaving the EU has gained us nothing in terms of EU law and regulation so anyone voting “leave” for those reasons should be gutted. They have been taken for fools.

But what about non-EU trade? Well, the Foreign Office are currently looking at our independent WTO trade schedule which will need to be ratified by all members of the WTO once we formally cut our ties to the EU. In order to make this work practically, the FO have decided to copy the EU trade schedule that we currently use, word for word, clause for clause. This is the only practical way to ensure that the other countries sign-off without dispute. So no change, no sovereign gain to be made there.

What about post-brexit, surely we will be able to change our trading schedule as we like? Well, maybe. We’ll be able to try to change the schedule, but each change will need to be signed off by all of the other members including the EU, and to be frank, there are political limitations to what can be achieved without trade-offs. Argentina might decide to cut-up rough about the Falkland island. Spain and the EU might decide to cut up rough about Gibraltar etc. All the practical reasons for adopting the EU trade schedule initially will remain in place making any changes difficult.

But surely we will be able to negotiate trade deals with other countries more easily? Maybe. But the first priority will have to be renegotiating the 50 or so trade deals that the EU has negotiated already with countries such as S Korea, Canada, Japan etc. and that we will no longer benefit from. Any suggestions that brexit might benefit UK trade with the developing world, Africa etc. failed to take into account the damage done by the UK stepping outside of EFTA when it leaves the EU.  Any benefit from a US deal, a newly protectionist US under Trump,  is likely to be offset with damaging concessions within the UK agricultural sector and health sector.

The political reality of becoming a small country once more, one trying to negotiate with much larger countries, is likely to be sobering politically. We may be more noble politically speaking but we will be playing catch up. At a basic level we will be trying to rebuild a negotiating team that we have long outsourced to the EU. We will be trying to catch-up with new deal with those countries whose trade deals we have lost with our EU membership. We be trying not to be pushed around by the sharks, despite our new status as a minnow.

Anyone voting “leave” for reasons of non-EU trading relationships is going to be facing some stark realities for the next decade or so.

Yet when engaging in conversations around brexit, there are plenty of “leave” voters still cheering. When faced with the argument that their reason for voting just isn’t going to be realised, most fall silent. Some retreat to other reasons such as “yes, but … fishing”

The problem is there is an obvious economic rebuttal to be made for each and every alternative (including Fisheries: 80% of the UK catch is sold into the EU and will be subject to tariffs).

But obviously people din’t vote leave because of the economy, they voted leave despite it, partly maybe because they didn’t believe in the predictions but also maybe because they didn’t believe that their local economy could get any worse.

As the regional breakdown of the expected impact of brexit shows, they’re about to find out how wrong that could turn out for them. The greatest impact of brexit will be felt in areas that voted remain, but in many ways those areas are also the wealthiest and also therefore best placed to cope with the downturn. Those areas voting “leave” will be impacted less, but will still lose 1-2% of their economy as a result of brexit. Since the UK as a whole will lose out more, the chances of regional or trade sector grants and allowances being maintained seem slim, so poorer areas dependent on regional regeneration grants, or subsidised sectors such as agriculture, fisheries etc. will be hit hard.

Ho hum. However you voted in the brexit referendum, you are not getting what you voted for. People who voted remain are just the ones who found out first.