“Brexit has failed”

Mark O'Neill June 15, 2023 06:00

“Brexit has failed” – this was the astonishing admission last month of Nigel Farage, former leader of the UK Independence Party (UKIP) and the man most responsible for persuading the British people to leave the European Union in a referendum in June 2016.

In the British general election in 2015, UKIP secured 12.6 per cent of the popular vote, making it the third party. This persuaded then Prime Minister David Cameron to call the referendum, in an attempt to end the debate over leaving the EU. Britain is a parliamentary democracy -- Cameron was not required to call a referendum.

To Cameron’s great surprise, the British people voted 51.9 per cent to leave. Humiliated, he resigned as Prime Minister and left public life.

Now, seven years later, the people see the results of their decision. In the six years from 2017 to 2022, GDP growth was an average 1.075 per cent. The IMF forecasts UK GDP to fall by 0.3 per cent this year, the lowest figure in the G7, with growth of one per cent in 2024.

In February this year, Jonathan Haskel, an external member of the Bank of England’s Monetary Policy Committee, said that Brexit had wiped out 29 billion pounds in business investment and exacerbated the slowdown in U.K. productivity.

“The lack of business investment growth since the 2016 referendum is equivalent to 1.3 per cent of UK gross domestic product, or about 1,000 pounds per household. The penalty will probably rise to about 2.8 per cent of GDP by 2026,” he said.

The main reason is the fact that Britain has left the EU single market with 450 million consumers. British goods exported to this market now need to go through customs and inspections, as do EU goods entering the UK. This has added time and costs which have made such trade for many companies unprofitable.

Firms based in Britain, both local and foreign, have moved part of their operations abroad to locations within the EU. Foreign investors who would have chosen Britain before 2016 have selected other countries, within the EU, for their factories and offices.

One promise of those campaigning for Brexit was controlling immigration. But, in 2022, net immigration reached a record 606,000, including from Ukraine and Hong Kong. Students accounted for one third and work-related visas a quarter.

Brexit has caused a shortfall of 330,000 people in the labour force, mostly in the low-skilled economy, said a report by the Centre for European Reform (CER) and UK in a Changing Europe in January this year. The increase in immigration from non-EU countries was not enough to compensate for the loss of EU workers who left, it said.

Transport and warehousing were worst hit, with a reduction of 128,000 of EU workers, or eight per cent of total employment in the sector. In wholesale and retail, the drop was three per cent, or 103,000 EU workers. In hospitality and food, it was four per cent or 67,000. Manufacturing and construction were down two per cent each.

Another sector badly hit is social care, including care for the elderly. Many British people do not wish to do this job, which is stressful and poorly paid.

The Brexit campaigners promised a sharp increase in spending on the National Health Service after leaving the EU. But a report on the website of the British House of Lords says: “The latest NHS vacancy statistics found the total number of vacancies in September 2022 was 133,446, a vacancy rate of 9.7 per cent, an increase from the previous year, when the number of vacancies was 103,809 and the vacancy rate 7.9 per cent.”

This is due both to the departure of staff from EU countries and inadequate government investment to train and hire new doctors and nurses.

Despite this overwhelming evidence, neither the Conservative nor Labour Party is willing to criticise the decision; they do not want to alienate those who voted for Brexit. Neither do the two wish to have a public debate on the issue.

In an article in a British newspaper in early June, Keir Starmer, Labour leader and the likely next Prime Minister, said that Britain’s future was outside the EU, “not in the single market, not in the customs union, not with a return to freedom of movement.” All he would say was that the Brexit deal negotiated by Boris Johnson would “require re-evaluation”.

So the British people are left with the decision they made in 2016 and its bitter consequences.

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Mark O'Neill

A Hong Kong-based writer, teacher and speaker.