The outcome of the UK’s misjudged (non-binding) referendum on its continued membership of the EU took virtually everybody by surprise. There was no mainstream economic opinion from any quarter that suggested that the UK would be better off outside the EU and many respected economic experts and organisations that predicted that the UK would suffer if it were to leave the planet’s biggest single market of approximately 500 million people. The economically illiterate amongst the Brexit supporters point to the fact that economic Armageddon has yet to engulf the UK. They fail to note that Sterling is near a 31 year low against the Dollar (roughly down by 17%, so imports priced in Dollars have become dearer) and that whilst markets have rallied since the vote, gains in London have been smaller than those on other markets. Their major short-sightedness stems from the fact that the EU-UK relationship is yet to change and that the UK continues to have unfettered access to the single market – once Britain invokes Article 50, its path to the exit will have begun and the riders of the economic apocalypse, Declining Inward Investment, Unemployment, Inflation and Uncertainty, will be seen in the land.
But all this is crystal ball gazing. In the year to April (when external observers were confident of a rational referendum vote) inward investment into the UK rose to a record 2213 projects, an 11% rise on the previous financial year. Ironically, this made the UK the most popular destination for overseas firms within the 28 member bloc. The investment has been linked to the creation of 116000 UK jobs during the year to April (the major investors were US, Chinese and Indian firms).
At the moment, businesses setting up from abroad in the UK have access to the single market through so-called “passporting” arrangements, but this would end if the UK ceased to be in the single market. Advocates of Brexit will need to compare the 2015-16 data against the post Article 50 figures to better understand the economic harm they have caused their own nation and fellow citizens. No doubt, inward investment figures will be closely scrutinised on a month by month basis going forward and are unlikely to make for happy reading. It is likely that Ireland, the only other land where English is used as a first language (and one resolutely not leaving the EU) will see its inward investment figures rising whilst investors try to get their minds around the nuances of “Brexit means Brexit” – even if it does, Brexit means different things to different groups.