UK economy still in doldrums at Brexit 3rd anniversary

LONDON, 31 Jan 2023:

Three years after Brexit officially came into effect, the UK finds itself in the teeth of societal polarisation, a labour shortage and growing demoralisation among the working classes – although for the time being, politicians are not considering a return to the EU.

The UK officially left the EU on 31 Jan 2020 – not long after then-prime minister Boris Johnson won a landslide victory in a round of general elections that he called with the intention of strengthening his mandate.

What followed was a transition period that concluded on 1 Jan 2021.

And while the Brexit anniversary date will slip by unobserved for many in the UK, it does so at a time of crisis.

Inflation has risen to highs not seen in 40 years, sitting at around 10.5%. There is a shortage of workers in sectors such as health and social care. And the Conservative Party government – which passed from Johnson to Liz Truss and is now overseen by prime minister Rishi Sunak – faces a litany of scandals.

The UK’s ongoing cost of living crisis and labour shortages in the public sector put the wind in the sails of massive strike action across numerous sectors from rail workers and teachers to nurses and ambulance drivers amid widespread clamour for better pay conditions to combat inflation.

Sunak’s government has linked the crises to external factors such as Covid19 and the Russian invasion of Ukraine – but experts have pointed some of the blame at Brexit.

The Centre for European Reform, a think-tank, said in a recent report the UK economy in 2022 was 5.5% smaller than it would have been had the country remained in the EU.

A recent survey by business group the British Chamber of Commerce (BCC) found that 77% of businesses in the UK said Brexit had not helped their companies grow despite promises to the contrary.

According to the survey, which was carried out among 1,168 medium and small companies, more than half (56%) of the firms face difficulties adapting to the new rules for the trade of goods and almost half (45%) have problems dealing with the new rules for trade in services.

A similar number of companies (44%) have difficulties obtaining visas for staff, according to the BCC.

Tim Bale, professor of politics at Queen Mary, University of London, said it was hard to come by an economist who believes Brexit has been a “bonus” for the country.

“Growth is lower than it should be, and so, therefore, are tax revenues – which means the UK’s public services are crumbling further and faster than even pessimists predicted.

“Brexit polarised the country and, although some of that polarisation is beginning to fade, it’s still a big factor in which party and which policies people support.”

Kevin Featherstone, professor in European Politics at the London School of Economics, also alluded to the divisive nature of Brexit.

“Brexit created an unprecedented split in political identities that cut across traditional party loyalties.” But he noted the idea of rejoining the EU was “off the domestic political agenda for at least 10 years”.

The opposition Labour Party, which is leading polls ahead of the next general election – set to take place no later than January 2025 – has for now dismissed the idea of rejoining the EU, the single market and the customs union.

But Matthew Goodwin, professor of politics at the University of Kent, believes Brits have grown more negative toward Brexit in the last three years.

“But we also need to counter this alongside the fact that for many voters, in 2016, Brexit was never just about the economy – it was also about restoring national sovereignty, accountability and transparency.”