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April 19, 2021 - 11:33am
According to Wolfgang Münchau of the Eurointelligence website, Brexit is a “macroeconomic non-event.”
He refers to IMF projections that have the UK economy growing a bit faster than the Eurozone economy for the next couple of years and then converging to much-of-a-muchness.
There was flurry of excitement at the beginning of the year when data showed an apparent collapse in UK exports to the EU. The lorries stuck at Channel ports may have been held-up by Covid controls as opposed to anything else, but the long-anticipated images were seized upon: the great Brexit disaster had arrived at last! But, as Münchau notes, the UK exports have “fully recovered”.
Of course it would be foolish to assume that it’s plain sailing ahead — or that British businesses aren’t experiencing difficulties already as a result of Brexit. However, Münchau’s focus is on the overall impacts of Britain’s decision to leave the European Union and why the dire predictions made by genuine experts (as well as the obvious propagandists) have not come to pass.
Münchau identifies three causes of this example of expert failure: firstly, “political capture” (the political establishment needed to win the referendum and official forecasters responded to that need); secondly, Brexit “drove some people to insanity” (and economists aren’t immune to political passions); and, thirdly, technical weaknesses in economic modelling.
But whatever the cause, isn’t there a case for holding the experts to account for the errors? After all, doesn’t talking down an economy have consequences? Five years of relentless, if largely baseless, negativity can’t do much for business confidence.
However, I doubt we’ll see many economists fessing up to their errors. It took the profession years to contend with its failure to predict the Global Financial Crisis of 2008 — and, arguably, the soul searching over that fiasco has been far from adequate.
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SubscribeThese people will never apologise because they have even less shame than expertise. As the writer observes, they are ‘talkers not doers’ who have never done a day’s trading or producing or selling (other than opinions) in their life. The politicians are particularly disgusting in this regard.
As I said countless time during the referendum campaign and its aftermath, if you have offer a product or service that people want to buy, they will find a way to buy it.
Particularly if you’re the only person offering it, or it’s not available more easily (due to non-tariff barriers) and more cheaply (due to admin costs or tariffs) from within the EU.
and the other way around too; buying British products from UK to send to the EU, the EU citizen gets taxed an extra steep custom tariff. You can imagine that British exports will dwindle streadily unless companies open up EU mainland offices (which is currently what is happening). In that sense, more jobs go to EU citizens or Britons living in EU instead of keeping jobs within Britain. Letting the general public believe that booting out the cheaper labour force of Polish, Romanians, Bulgarians etc is really going to change something, that’s playing into the big myth in itself.
As some one who had to compete with that cheap labour force, I beg to differ.
me too
and me, but was there a connection between “booting out the cheaper labour force ” and booting out the criminals and parasites who arrived under the guise of belonging to same after Juncker and co refused to discuss the matter?
Well it was your stupid government led by one Tony Blair that caused the flood of Eastern Europeans into the UK from the early 90s. The UK had the right under EU law to block access to benefits for the new EU members for up to 15 years.
Don’t blame the EU – blame your lousy politicians.
We all pay for the supposedly cheap labour, any citizen of the EU could have come to the UK, millions did and still claim benefits, the wives and girlfriends of this cheap labour all sent there child support back home, just to make a bunch of criminals and property developers in London richer in return for donations to the pols and plenty of anti native bigotry.
The Queen asked why noone saw the 2008 credit crunch coming and those people are supposed to be expert financiers and economists who handle trillions of pounds of investment-so I suppose ‘experts’ who ignored the meaning of the UKIP vote which was half size Labour vote, for a first time party, is par for the course.
You are correct about the lack of shame.
I was told on my doorstep by my own MP (I won’t name him here but he has been a front bench labour MP since the Blair days) that he had spoken to the head of Nissan UK and been told that the say after a Leave vote, Nissan would announce the closure of the Sunderland plant in our own North East and that all it’s workers would be unemployed by Christmas (2016).
Not only was this a lie (nothing else, a plain old lie with no basis in truth), but it appears that the plant will now be expanded by moving battery production from EU to UK.
Having covered Nissan for too many years, and being a boring pedant, the battery production is actually moving from Japan, and Nissan recently closed Barcelona which expanding Sunderland.
But your main point is 100% right… NIssan feel the Sunderland plant is not just it’s best outside Japan but ranks highly when judged against even it’s best Japanese plants.
They have said the trade deal is not just *OK* but net positive for the company, and then backed that up with action.
There was talk of Renault moving some production, including Captur models to Sunderland (renault and Nissan being in an alliance) but that may have gone west..probably because of Macron …the clear eyed approach of the Japanese Board, contrasts with the desires of really over-invested Remain fanatics, so they just utterly ignore everything they say and do.
Brexit ‘drove some people to insanity’? I’ll say! The last five years have shown us a classic example of the ruling class losing its collective mind and it’s been a sobering lesson.
Most irresponsible of all are George Osborne and the Treasury, which warned of a drop in income and a horror budget if Leave won. They just clammed up when that didn’t happen. Do they think we haven’t noticed?
1) Can we all just pack in talking about whether Brexit was “worth it” or not? Whether it has “paid off” is something we’ll only be able to understand over the long run. Even then, its success or failure will be hard to determine because the drive to leave the European Union wasn’t just about economic considerations but involved many other factors which are hard to pin down in figures and analyse in an objective way.
2) Brexit drove some people to insanity? Talk about stating the obvious…I’m fully expecting psychologists to identify some kind of syndrome (e.g. Obsessive Compulsive Brexit Moaning Disorder, or OCBMD – because the modern world loves an acronym) in the near future to describe the phenomenon of otherwise reasonable people going off their rockers for an extended period of time over this issue. Which leads me on to my final point…
3) This condition may be incurable. So experts won’t be fessing up, or correcting themselves, or eating even a single crumb of humble pie. The more likely scenario will be repeat incidences of manic “I told you so!” excitement when some kind of detriment (either real or imagined) or problem arises which can be linked – however tenuously – to leaving the EU. (And don’t even start feeling smug about this, Brexiteers…because you are just as bad at this when something happens which suggests you were right.)
I don’t think you will be able to pack in talking about Brexit for a generation or more. In the States, we will be talking about ” All Things Trump” for just as long. They both are manifestations of the same phenomenon and will not go quietly away.
“…When will the ‘experts’ apologise for their Brexit predictions?…”
Hahahaha…they still don’t think they were wrong….
The vaccine issue does illustrate the general benefit of a country being able to do things differently. But the UK was able to do that differently while bound by the EU rules, so it does not in itself illustrate the benefit of Brexit.
Unfortunately as yet there are few good examples of things we have been able to do differently as a result of Brexit, and none where the economic effects are clear. Reforming the CAP will be a good test case. It may succeed brilliantly, economically and environmentally – or it may fail through bad design, insufficient funding, or because it is configured in the interests of Tory voters or donors.
But we’re committed to Brexit now. We need to make what we can of it. It occurs to me that openness, good data, and scrutiny of government actions, will all be important in ensuring that we can tell how we’re doing – and in ensuring we’re actually doing the right things.
You make some good points. But do you seriously believe the UK would have embarked on its own vaccination programme had it still been in the EU? Any British government proposing such a course of action would have been vilified by Brussels, every other EU govt, almost all of the media, the UN, the US and pretty much every other fraudulent organisation you can think of.
You made the point before I could! Yes technically we could have gone our own way on the vaccine programme – but we wouldn’t have, not least because of the politcal cost of ‘going it alone’ when there was collective effort. If we were still in the EU and gone it alone, one of two things would have happened.
1.) We would have had the vaccine programme we have now, and would have been vilified for hogging vaccine production (even more than we are now)
2.) Our programme would have been worse, and as a result the government would have probably collapsed.
The thing to remeber about politics is that success is only half the story – the other half is having plausible deniability. No Gov in the EU will take the fall out for a bad vaccine programme, because the fault is the EU not the national governments, and as the EU isn’t elected there is no fall out that can hurt the people responsible.
Just look at how the UK government was vilified because they didn’t join the EU’s PPE scheme. OK we made a bit of a dog’s of it but they made the whole hound pack.
The vaccination programme should not be held up as the shining example of what we can do on our own, but just another example of what a thoroughly rotten institution the EU project is as it puts its own survival ahead of the survival of the people of its member states yet again.
How about the fact that we have now signed 67 trade agreements? Is that not a shining example of what we can do on our own?
Not really. First, Wikipedia says “36 trade agreements”. Second, they are mostly rolling over existing agreements made by the EU with minor modifications. Useful housekeeping, sure, but hardly a great achievement.
Absolutely. Every statement made by the Government re EU needs to be fact checked. In fact any statement made by anyone about EU needs to be fact checked.
36 tweaked existing is better than non – as we were repeatedly told it wasn’t possibly to have any in such a short space of time – or so the ” experts” said
They were copy and paste jobs of deals the EU had already in place. There was one exception – Japan – where you did much worse than the EU deal. And boy will that be clear in 2028 when Japanese made cars will have duty free access to the UK in exchange for duty free access for Stilton cheese to Japan. Brilliant – you couldn’t make it up. Dream on guys, dream on.
If I remember rightly, that happened anyway! We were crazy, lost our minds. I also remember the hatchet job that was attempted on Kate Bingham which attempted to say that she’d disclosed confidential data to US investors. Turned out to be untrue
The UK would never have gone it alone as regards to the vaccine roll out – but that is the joy of being a sovereign nation – governments can be closely scrutinized by the electorate and there are no excuses for bad policy making
The issue which seems never to be debated is the historical fact that the Establishment is always wrong about every crucial political and economic direction the country ought to take.
Look at any major consideration these past 200 years.
At the Congress of Vienna 1814, the standard orthodoxy was that France was Europe’s permanent menace and therefore, decided the victorious Brits, all the German territory now being confiscated from Saxony etc should go to Prussia.- Prussia had a military mentality, a fine war-machine, so she on the other side of the Rhine would keep the French penned in and unable to launch more European wars.
Thus they switched Europe’s Troublemaking Role from France to Prussia.
The flaw in their reasoning was perceptible, for those who had knowledge and intelligence, at the time. Prussia was a country created by military conquest, sustained by it and habituated to it.
Had the British envoys been thoughtful and sapient, they would have campaigned for the vast tranche of northern and western German territory in question to be added to Hanover, whose king was also ours. That would have penned in the French, without giving them neighbours who would always be seeking to enlarge themselves at Europe’s expense.
And so it has gone on. – Guarantees given to Belgium in 1839 with no strategic means of maintaining Belgian sovereignty and independence other than all-out war (as in 1914-18) with whatever major power decided to invade that country.
And so on and so on. The gross error of joining the EEC is but the latest of these Big Blunders.
Is it not about time that our whole nation had an active debate on this score? – Why are our experts, like the poet John Dryden’s account of the Duke of Buckingham, ‘stiff in opinions, always in the wrong’? Decade after decade, century after century.
Selection bias? The establishment are those who take action to solve the current problem. And whatever action they take will inevitably lead to the next problem.
One bloodthirsty Roman emperor was advised that no matter how eagerly he killed all potential rivals, his successor was bound to be one of those he missed.
another type of selection bias : history is the record of what happened, not what has been avoided through shrewd government.
Of course, you can find the root cause of all ills in the actions of the establishment, but how many wars, aggressions, crisis,… have been avoided by these same individuals ? we’ll never really know
Exactly!
While I agree with all of this, it is important not to lose sight of something else Walter Munchau noted in his fine survey: ‘I am not making the argument that Brexit will be an economic success. I don’t think it will. The best economic argument against Brexit is the one that was never made: that a UK government under either Labour or the Conservatives is unlikely to make best out of the opportunities for regulatory divergence.’
Time, in Hartlepool and everywhere else in the United Kingdom, to send representatives to the House of Commons who are not Labour nor Conservative party members and who are informed, sensible, intelligent persons with a good track record of managerial competence: in short, very unlike all current MPs.
I’m glad you pointed out the bit of Munchau’s analysis the article chose not to. But I also think the limitation of the analysis was the way it looks at one single issue – balance of trade by value. No analysis of type of trade or impact on employment. British companies exporting highly expensive services will not necessarily create or sustain UK jobs or communities.
Prediction is difficult, specially when it involves the future!
The main failures now are weather forecasting and its even less reliable stablemate, climate predictions, a load of rot fouled by GIGO.
Political waits and see has been discarded, to our ruinous cost.
Dopes in charge!
I wonder if the doom monger will be proved wrong also after Scotland separates (assuming it does).
For sure the sun will rise and set as it has always done, but the rest? It is also sure that in these cases the long term consequences won’t be really clear for years to come, and by that time the instigators will have retired to a more comfortable life.
That’s a little different in that, as far as I’m aware, the SNP are basing their economic outlook on having the subsidies under the Barnet Formula replaced with those from Brussels. Which may not be forthcoming.
The UK, on the other hand, was a net contributor to the EU.
The economic results of Scottish ‘Independence’ could, therefore, be rather more quickly apparent.
The SNP know that Scottland can not exist in its current form without subsidies from others. They just don;t want to tell the Scottish public that.
Well, the free bikes must be coming from somewhere…
The ‘experts’ never apologise for their blunders.
They simply move on to their next big bad (wrong-headed and wrong-hearted) theme, to foist that on the public.
“Experts” never admit to having been wrong even when there is no doubt about it. An excellent example is a recent interview with the Swedish pandemic tsar, elsewhere on this site. Despite admitting that his predictions were way off on every single metric of the epidemic, Mr. Giesecke concludes that he “got most of the things right, actually”. Delusional does not even begin to describe it.
Brexit has been absolutely marvellous here in Northern Ireland. I can tell my Unionist neighbours that they must be wrong to insist there are problems which Tony Blair and others warned about. It was all Project Fear!
In 2016 a student in my political science seminar proposed to conduct a study on the “consequences of Brexit” which, of course, had not yet been felt. I urged him against it. Still, he was certain that the consequences would be dire. He was also about 20 years old and naturally he thought it impossible that the schlub teaching his seminar could know political economy any better than the well-paid talking heads on TV. In the end circumstances compelled him to change his topic, but he never acknowledged the folly of his a priori judgment. One hopes he learned something from the experience.
This just goes to show that not all of the “experts” were certain that Brexit would be dire. Chiefly it was the well-paid ones in TV-Land– who haven’t been hurt much by Brexit, either (pity the schlubs). More importantly, it demonstrates the paradox of the true “expert” in politics: like Socrates on the ship of fools, everyone regards him as an idiot! Alas, we can learn only from our own mistakes –provided we can acknowledge having made them.
….. maybe that is because, economically speaking, you have a brexit that is only a brexit on paper… really, and with a lot of inconveniences for people who have a broader view than the borders of this country..
Wolfgang Münchau has being predicting very little economic effect from Brexit for years. Others have predicted the opposite. Perhaps Münchau is right – or maybe he’s just not yet seen enough evidence to change his mind. As anti-vax people keep saying, we have no long term data yet.
But there are worrying signs for fishing, and car manufacturing. GB-NI trade is heavily affected. The Financial services sector is badly hit. And companies are being forced to relocate at least partly to the EU. Additionally, long term trade with the EU may depend heavily on political decisions on equivalence and convergence (which are hard to predict).
The first month looked very bad. The next figures less so. It’s too early for a definitive answer on what the cost will be. But it’s premature at best to proclaim that Brexit is an economic success.
I think the equivalence argument is moot. If anything has been learned in the past few months it is that the EU is not trustworthy on rule of law and that the UK should seek divergence allowing it to regulate in an agile manner to maximise innovation.
Munchau’s simple arithmetic error that led to his false claim that “exports have fully recovered” is explained by Jonathan Portes at https://twitter.com/jdportes/status/1384454247740182537
As Paul N and Katherine Eyre say, it will take years before we have enough data to reach any kind of conclusion. No point for either side in insisting on a reckoning already.
But if you insist, I suggest the experts should wait till after Boris Johnson apologises for
Whatever the long term verdict on Brexit, those have been proved wrong already.
Ah…so you must know the chap in the pic above.
I was against, Brexit, yes, but there is more than one of us, you know. We shall see how it plays out over the years. Meanwhile, why not just deal with the point in hand? Was it the world’s easiest trade deal? Is there a border in the irish Sea? Were the remainers the only ones who, let us say, strained the truth a bit?
No, it wasn’t the world’s easiest trade deal. Personally, I knew that the EU would never negotiate but dictate the terms of departure in the event that Britain voted to leave. Seeing Greece punished to an unnecessary, even sadistic degree made it clear that the EU would show no flexibility and no moderation with GB – despite the fact that GB had always been a net contributor and also hadn’t almost caused a pan-continental currency meltdown. What surprised me, however, was the extent to which the EU would be willing to hurt itself in the attempt to make Brexit fail and be seen to have failed. This is completely irrational behaviour that no reasonable person could have predicted.
Likewise, it was (and continues to be) quite shocking to witness how the EU consistently prioritises the integrity of the single market over stability in NI. Repeating the mantra “the agreed checks must be implemented!” ad nauseum, ad infinitum – seemingly without any sort of consideration about whether the goods coming in represent a real rather than just an academic risk to the integrity of the single market cements that view. Will the entire world collapse if a bit of British soil accidentally enters ROI. Of course not, it’s absurd. This kind of overly legalistic approach is absurd and therefore could not have been reasonably expected prior to the referendum. Of course we are all wiser now and know that, in any given situation, the EU will always take the most academic, intransigent and vindictive option possible. One is now prepared.
That should not have surprised you. International treaties are generally dictated by naked self-interest. And the perceived interests of the EU are not the same as those of the UK; in fact I suspect that the current Brexit deal is perfectly rational – it suits the real interests of the EU better than anything else that Boris Johnson would be willing to sign. From their point of view you are asking them to sacrifice their interests for your convenience, you are offering nothing that they want in return, and you are not even being nice about it. Why should they want to do you favours?
The members of the EU are committed to collaborating. That gives them a shared interest in keeping the project working and a use for maintaining goodwill. The UK has left that. You can also get some concessions by being a constructive collaboration partner, helping to find mutually beneficial solutions and offering a stable and reliable relationship. Boris Johnson explained his policy like this:
The EU is a compromise machine, that works because you can trade concessions in one area for gains in another. If you can get the benefits you want while opting out of the concessions, that is an existential threat to the EU project. So is giving uncontrolled market access to a country that can undercut the EU rules, either outcompeting them or forcing the EU to take the UK rules. In return for access the EU would want reliable, long-term guarantees on UK behaviour – and the UK is refusing to give guarantees, refusing to reveal its plans, and breaking treaties it signed less than a year ago.
The EU clearly has no reason to *want* to give you anything. If they needed you enough, they would be forced to accept your terms.Clearly they think they can manage better without you.
On NI, you should not forget that the UK created the problem – first by leaving, second by refusing the only simple solution, which would be to harmonise phytosanitary standards with the EU. After that it becomes hard. It remains possible to organise a deal that both sides can live with – i.e. that simplifies goods transport from the UK to NI, without making NI into a conduit for non-EU-approved goods into the EU. It just requires both sides to stick to the rules, show good will, and build up trust and credibility. You can only start making exceptions once it is clear that they will not serve as precedents to undermine the whole regime. Meanwhile the UK is systematically ignoring its obligations, to the point that you suspect they are deliberately trying to sabotage the current protocol.
The EU can reasonably ask why they should be the ones to relinquish their interests to protect the Irish peace agreement, just because the UK refuses to do so.
Twerp ..Theresa may ”Remain ”Treaty is the Problem, The EU has No Say on 1922 Border….. Northern Irish people Will continue to Riot until they Can trade With whom they please..
That could well be – but how do you expect it would end? Will the UK government sign up to the EUs harmonisation demands so they can get a deal without export paperwork? Will the EU leave the border open to uncontrolled UK imports, in order to protect law and order in Belfast? Or will Ireland break with the EU and join the UK customs territory as a non-voting partner?
It was not the world’s easiest trade deal because a remainer was in charge of negotiating it.
What ridiculous headline. When does any expert or politician apologise for anything ? When will Brexiteers apologise for their lies in the selling of Brexit to the public or their cancelling the Good Friday Agreement ? Plus I would remind the author that we have only been out of the EU for 4 months… not years as stated.
Well Brexiters it is time to wish you well on your future global voyage on the leaky rust bucket HMS Brexitania. You might find that at every port you limp into looking for a trade deal that the EU was there before you and already has a better trade deal than you will ever get as a small marginalised economy. Note that a few cities in China have a greater population than the whole of the UK – and that’s before your semi-detached nations finally decide they’ve had enough of Tory Brexiter arrogance and go for independence.
Meanwhile significant economic power houses like the EU, US, Japan, India and China can play at the big boys table.
HMS Brexitania will need all hands to the pumps to her afloat, so go to it men and, of course, women – pump, pump, pump.
As a lover of open journalism from different political spectrums, whether left or right, I do feel that Unherd is more and more leading the way of right-wing wokeness as a reactionary force against liberal or left wing wokeness. No other word for such defensive tactics than ‘sad’ instead of having a real sensible debate.
Letting everyone who does not agree to the liberal or conservative agenda eat humbe pie is not going to help one bit in solving the many issues at stake for the UK or EU. Instead it will be too much eating without proper time for digestion. All that humble pie, such political gluttony! 😉
Well said – I do always roll my eyes when I read an Unherd article, or see a comment that says “Left wing blah blah blah”. Using terms that have become obscuered by over-use and have a chimera like ability to mean differnt things to differnt people does not enhance or further a debate and is a tactic used by many differnt groups to prevent meaningful discussion.
You 2 need an hour or two on twitter, just to see the heinous left at work. Then try and find some “right-wing” (aka normal people who are not left-wing) wokenes.
That’s one of the reasons some of us are here and not on Twitter. Or are you suggesting Unherd should be, in essence a safe place for ‘normal’ or ‘right wing’ people to expound their views away from the Twittersphere?
What on Earth is right wing wokeness ? Did both sides of the Brexit debate use dodgy tactics? Yes. Did the EU negotiate in good faith? No. Are the EU institutions playing silly b*****s? It appears so. Are Leavers and Remainers hanging on to any scrap of evidence that supports their prejudice? Of course they are. Will we be noticeably better or worse off out of the EU over the next few years? Haven’t a scooby. Does anyone have anything better than a wild guess? I doubt it.
Our future will be what we make it. There is no point being stuck in the past. We are where we are, look forward and make the future better.
Graeme,
Common sense seems out of place on this forum. Welcome, though.
Stuart
If cowboy builders, who promised to improve your roof, end up wrecking the whole house, it behoves you to be very wary of their advice and skills in future.