🇬🇧 Success or Failure: What do we know so far about the consequences of Brexit?

#19

I've just read this New York Time's opinion piece about today's Britain. 

Here is the beginning: 

"Long lines outside gas stations. Panicked drivers fighting one another as the pumps run dry. Soldiers deployed to distribute fuel across the country. And in the background, the pandemic stretching on, food rotting in fields and families sinking into poverty. This is Britain in 2021."

Obviously, Britain is going through some kind of nightmare right now.

One reason for this nightmare: labour shortages

There is a shortage of truck drivers and fruit pickers, meat processors, waiters and health care workers. 

I wonder whether this negative development is the result of Brexit or the pandemic. Or both.

One thing is for sure: Many people leave the UK. 1.3 million overseas nationals left Britain between July 2019 and September 2020. 

For a long time, it was the other way around.

A look back. 

In 2004, then prime minister Tony Blair opened Britain's doors to workers from former communist states in central and eastern Europe. "Over the next decade, Britain's economy and society were transformed by hundreds of thousands of arrivals from Poland, Lithuania and elsewhere," the Financial Times writes in a profound text. At its peak, the number of European migrants in the UK was by some estimates five million or higher, from a population estimated to be more than 66 million.

Blair's decision changed UK politics and made the withdrawal of the United Kingdom from the European Union possible. Migration had brought prosperity to Britain but it brought more competition for jobs, too. Locals competed with migrants.

As a result, the pressure on politics increased. The majority of the Britains were more concerned about immigration than they were about maintaining trade benefits. Consequently, (pro-EU) Prime Minister David Cameron’s government held a referendum on continuing the EU membership in 2016 (he had promised to do so if his government was re-elected). Result: In the referendum in June 2016, the UK voted to leave the EU by 52 per cent to 48 per cent.  

Back to the present - and the reasons for the current labour shortage in the UK. 

"The effects of the Covid-19 pandemic are visible across the whole of society, and migration is no exception," Madeleine Sumption writes, Director of the Migration Observatory, a multidisciplinary research centre at Oxford University. According to the researchers, there is no clear answer to why so many people left the UK. It might be because of the pandemic or because of Brexit - or because of both.

So let's have a look at other effects. What has changed since 31 January 2020, when the United Kingdom left the European Union under the terms of a negotiated divorce deal, bringing to an end 47 years of British membership of the EU and the institutions that preceded it?

In the beginning, not much had changed. A "transition period" keeping most pre-departure arrangements was in place till 31 December 2020. 

Therefore the current separation isn't even a year old. 

The most immediate impact has been on UK exports to the EU. Britain had recorded a record fall in trade with the European Union in the first month since the end of the Brexit transition period - but then recovered.

And how does it look today?

Here is the newest data from Eurostat, the statistical office of the European Union: Between January and July 2021, imports to the EU shrank by 17.1 per cent (compared to the same period last year). 

In comparison: Other than the UK, EU imports increased with all main trading partners from January to July 2021.

How does this decline affect the UK in general - for example, in terms of growth? Actually, very little. The UK's annual gross domestic product (GDP) is developing similarly to Western Europe (check this chart).

However, more detailed analyses show some economic losses. The Office for Budget Responsibility, a public body, funded by the UK Treasury, says in their recent Brexit analysis

  • In the near term, trade disruption associated with Brexit reduced gross domestic product (GDP) by 0.5 per cent in the first quarter of 2021. 

  • Brexit will reduce long-run productivity by 4 per cent relative to remaining in the EU. 

Enough numbers. 

This is how I would sum up the situation: After Brexit, economic horror scenarios did not become a reality. But negative consequences can be seen in many places. Especially these days.

And what about the near future? 

"There is a margin where economists can haggle over the cost of Brexit, but none dispute that raising barriers to trade reduces trade," Guardian columnist Rafael Behr wrote recently. And: "The barriers are not yet fully erected. The regulatory pain is dulled by anaesthetic waivers and grace periods. Those expire in the coming months."

PS: 

Do you think the experience after Brexit changed the minds of the British? Have a guess! Here is the answer

Notes: 

https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/theimpactsofeuexitandthecoronavirusonuktradeingoods/2021-05-25  

https://www.nytimes.com/article/brexit-uk-eu-explained.html 

https://obr.uk/forecasts-in-depth/the-economy-forecast/brexit-analysis/#assumptions  

https://whatukthinks.org/eu/on-brexit-labour-and-the-local-elections/ 

https://www.theguardian.com/commentisfree/2021/aug/24/brexit-failure-remainers-shelves-empty-eu 

https://www.statista.com/statistics/369222/gdp-growth-forecast-western-europe-vs-major-economies/ 

https://trade.ec.europa.eu/doclib/docs/2013/december/tradoc_151969.pdf

https://www.euronews.com/2021/03/12/uk-sees-record-fall-in-trade-with-eu-after-end-of-brexit-transition-period 

https://www.euronews.com/2021/06/23/brexit-draft-deal-first-of-many-hurdles-to-a-smooth-exit 

https://www.ft.com/content/de721f35-d228-48de-bd9f-d2168b16aba6 

https://www.nytimes.com/2021/10/01/opinion/britain-fuel-crisis-johnson.html

https://www.nytimes.com/2021/09/27/world/europe/britain-gas-shortages.html 

https://theconversation.com/the-huge-political-cost-of-blairs-decision-to-allow-eastern-european-migrants-unfettered-access-to-britain-66077 

https://en.wikipedia.org/wiki/Brexit 

https://www.bloomberg.com/news/articles/2016-10-25/brexit-bulletin-britons-care-more-about-immigration-than-trade 

https://migrationobservatory.ox.ac.uk/resources/commentaries/where-did-all-the-migrants-go-migration-data-during-the-pandemic/