Challenging Brexit thinking

1. Overview

This page aims to probe and challenge many of the arguments and assumptions about the negative economic consequences of leaving the EU which continue to be quoted without proper forensic analysis. It also presents publicly available economic data to provide some clearer context on Brexit.

The Brexit Party believes in a positive and strong economic future for the UK with higher growth than can be achieved in the EU, or with a “soft Brexit” or “withdrawl treaty”, and a diverse society, included a fairer and sensible approach to immigration based on merit regardless of nationality.

The page includes the following sections:

• EU-UK Withdrawal Agreement and Political Declaration: Is it Brexit?
• Changing global trade and economic trends
• Workers’ Rights
• Other material disruptions: climate change and technological advancement
• Immigration and globalisation

2. EU-UK Withdrawal Agreement and Political Declaration: Is it Brexit?

The Withdrawal Treaty and Political Declaration is not Brexit. As I’ve analysed it, there is a real risk that will lead us right back to a more integrated EU. For further details visit this webpage.

3. Changing global trade and economic trends

a. Trade numbers (Office of National Statistics (ONS) figures)

• EU Trade: Trade with the EU is on a long-term decline relative to the rest of the world. In 2018 the EU as a whole accounted for 46% of UK exports and 54% of imports. In 2002 the EU accounted for 55% of UK exports and 58% of imports.
• We have trade deficits with most EU countries (see table below). Ireland, Sweden and Denmark are notable exceptions.
• US Trade: The US is currently the most important trading partner for the UK (see table) by country. We also already have a significant trade surplus with the USA which is good for the UK economy.

The UK’s largest trading partners (2016)

b. Factors that will change global trade patterns

Factors that will continue to shift the balance of UK trade towards the rest of the world relative to EU include:

• The continued growth of countries outside the EU, particularly emerging markets, and their significant outpacing of growth in EU countries.
• The UK entering into trade deals with countries outside the EU (as far as required) to further improve global trade volumes with those countries). However, the UK cannot enter such trade deals as long as it remains tied to EU rules in a customs union arrangement.
• The UK reviewing and amending over-burdensome EU-based regulations to reduce costs for doing business in the UK, while maintaining high (including internationally agreed) standards, but facilitating trade between the UK and the rest of the world.

c. Flawed government reports and predictions on the economy and industry

Various reports, including those by Government (e.g. Office for Budget Responsibility (OBR)) and the Bank of England (BoE), are often cited as strong evidence of the detrimental impact of a clean break Brexit on the UK economy. However, working in the financial services industry, I know accurate predictions are very difficult to produce and do not take into account all factors which have an influence. The past is also a good indication that Government and economic predictions are often unreliable. For example:

• The negative predictions of not entering the Euro proved completely inaccurate. Given how unstable the currency currently is, coupled with the unsustainable debt of some Eurozone countries, it proved to be the right choice.
• Negative economic warnings of the consequences of just choosing to leave in the 2016 referendum proved untrue.
• Economic recessions and other key events, including the last financial crisis, are hardly ever accurately predicted by Government and central banks.
• Mistakes are also often made on past performance let alone predictions. For example, see the last ONS press release reporting adjustments to RNI numbers.

Furthermore, when analysing various reports on the economic impact of Brexit, it is clear the analysis is flawed as they generally only look at the potential impact of trade with the EU, but ignore the impact of the opportunities from a clean-break Brexit. In particular they do not account for:

• Deviating from costly and burdensome EU regulations to improve conditions for business, which hinders competition as it is a significant and costly barrier to small businesses.
• Opportunities afforded from new trade deals with other countries, including fast growth economies which are gaining ground on the larger economic countries.
• Greater flexibility in the UK’s approach in business taxation, particularly for small businesses.
• Business always needing to be done and its ability to adapt to change as it has always done. The impact of potential tariffs and other barriers across goods and services put in place immediately after a clean break Brexit may have some impact (certainly not to the degree as some have suggested), but this has to be offset against the impact of the fall in value of pound sterling has, particularly its positive impact on exports.

Industry impact: financial services

Some of the Government’s own industry-specific analysis is also clearly flawed. For example, for the financial services industry, the numbers of employees and business (because of “passporting” rules) said to leaving the UK have been vastly overstated. This is in part because outsourcing arrangements (where EU based entities take advantage of skills of employees based in the UK) are not taken into account.

I worked directly on Brexit related projects in private industry and know first-hand how flawed and inaccurate Government reports have been. These overstatements have been reported in some media reports, yet politicians continue to ignore or distort facts.

Government reports also do not take into account that longer term HM Treasury, the Financial Conduct Authority and Prudential Regulation Authority could improve rules that 1) maintain standards to prevent the problems that led to the last financial crisis, but also 2) undo some of the costly rules that do not provide any meaningful benefit and hinder competition from new entrants into the industry.

4. Workers’ Rights

Much has been said about Brexit and EU based workers’ rights. I’m a firm believer in the value of the rights of workers for a sustainable economy. That influence comes in part from my late Grandfather, Yoginder Pal Bhanot, a railways (British Rail) man in the 1980s and 1990s, trade union member and an advocate for workers’ protections. However, there is a lot of fear mongering regarding what will happen to UK workers’ rights post Brexit. For further details and my views visit this webage.

5. Other material disruptions: climate change and technological advancement

Other material disruptions: climate change and technological advancement

Politicians are falling asleep at the wheel. They are so focused on Brexit that they are failing to adequately prepare for other key changes to the world which will have a far bigger impact on the UK economy than the impact of Brexit on trade with the EU.

a. Climate change

The fight against climate change is the most important issue for our generation and future generations. As we transition to a clean, green economy globally there will be huge shifts industries globally. For example, the automotive, aviation and rail industries are undergoing significant disruption as technology is developed to ensure carbon neutrality in these industries is achieved. The UK needs to take the lead in supporting British industry to achieve these goals.

Yet the UK Government and Parliament as a whole has simply lacked ambition to address this challenge. Globally we have to go beyond being carbon neutral at some distant time in the future. We actually need to take action on becoming carbon negative, which means considering bolder ways to reduce CO₂ levels. Aside from cleaner technology, reforestation is another strategy that needs to be appropriately considered and deployed which are issues I will push if I am elected.

b. New technology, data and artificial intelligence

Technology is completely changing society. Social media has made the human race more interconnected. While we continue to grapple with some of the ongoing challenges with interconnectedness, including issues such as data manipulation, quality of data, personal data protection and cyber bulling, there is no question advancements in information technology has had an overwhelmingly positive influence on society globally.

Going forward technological advancements will continue to expand at an accelerated pace which presents both opportunities and challenges.

• The Government has a responsibility to consider the impact of potential challenges, including the replacement of employees with automation and, increasingly going forward, artificial intelligence. Technology is starting to have a significant transformative effect on many industries today and this will increase going forward. Yet neither Government or opposition parties appear to be engaged on this.
• A wise Government should also plan to consider how it can best leverage the opportunities from technological advancement, including facilitating creativity in and the expansion of technology, as well as developing intelligent education and employment policies to prepare for the development of entirely new as well as changing industries of the future.

6. Immigration and globalisation

The Brexit Party has put together excellent candidates representing a diverse range ordinary but talented men, women and transgender people from non-political backgrounds. This reflects the UK which has always been a liberal and diverse country, and more so than any other EU nation.

With that in mind immigration always has and always will continue to support economic growth in the UK, as it well in other countries. However, in the modern interconnected global age, immigration policy should not artificially discriminate on the basis of nationality (which EU membership does) and should be approached on a merit and needs-basis regardless of a person’s country of origin.

It should also be applied intelligently together with improving UK based education and training to better meet the needs of long-term growth in the UK economy and British people.

Brexit should not be allowed to continue some of the pitfalls of globalisation but national policy should address them, including reversing the transfer of high-quality skills and labour to low-cost (“cheap labour”) models, aimed purely at driving costs down to maximise global profits for corporate shareholders which continues to expand the divide between the wealthy and the poor. This ultimate depends on who is in power, but if I am elected I will push for this.  The Brexit Party more generally is committed to an independent self-governing UK in a way which is both good for business and also good for ordinary men, women and transgender people.

7. Useful links and sources

Please see the Key studies and reports page.