During the 2016 referendum campaign, Michael Gove, the then Justice Secretary and a prominent Leave campaigner, famously stated: “… people in this country have had enough of experts”. He went on to suggest that Brexit could deliver additional millions to the NHS and allow a cut in VAT on fuel and when asked about a potential bid for the Tory leadership replied, “Count me out” only to run for it less than a month later. It is tempting to say that people have had enough of Mr Gove…
One of the group of experts that Mr Gove was so scathing about was the Organisation for Economic Cooperation and Development (OECD). They have just released a report entitled “The economic consequences of Brexit: a taxing decision.” The report suggests that Brexit represents a major shock to the UK economy which will have negative consequences for other OECD countries. It claims that “Brexit would be akin to a tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU”, but, of course, we don’t need experts.
The report states that in the short-term a Brexiting UK will be hit by tightening financial conditions; weaker confidence; higher barriers to trade; and detrimental effects of a restriction on labour mobility (the taking control of immigration prong of Brexit) in the near term. The report concludes that Brexit will reduce the UK’s GDP by 3% over the level it would otherwise have achieved by 2020; a cost they estimate of £2200 per UK household.
Over a longer period, the report suggests that structural impacts would manifest for capital; immigration and inhibited technical progress. Labour productivity would be adversely affected via a drop in direct inwards investment and a reduction in the pool of skilled workers. By 2030, the OECD crystal ball sees a 5% cap between a Brexit Britain’s GDP and that which it would produce were it to remain in the EU.
A remaining UK would enjoy enhanced living standards as the EU and its single market reform to respond to the nationalist challenges across Europe which were manifested in the UK vote and the rise of nationalist parties in various EU member states.
Recent opinion polls in the UK reflect a shift in public attitudes to Brexit and latterly have been reporting a majority position in favour of remaining within the bloc. Currently, neither of the two major political parties is taking a stance of either reversing the Brexit decision or granting a referendum on the final Brexit deal negotiated by the government. However, these options are amongst those being proposed as amendments to the repeal bill which is a critical piece of legislative architecture for Brexit.