Markus Andrews

It was a vote famously won, at least in part, on money. “We send the EU £350m a week,” read the message on the side of Vote Leave’s battlebus. “Let’s fund our NHS instead.” The figure referred to an estimate of the UK’s gross contribution to the European Union – in reality there was much more at play in the economics of EU membership, including money Brussels sent back to Britain and trade benefits.So, five years on from the vote, what has Brexit really meant for the economy?The UK finally left the EU’s single market and the customs union under the terms of Boris Johnson’s bare bones free trade deal with Brussels on 31 December 2020 – a deal that economists predict will significantly hold back the UK economy over the coming years relative to staying in the bloc.But economists judge that the costs of Brexit first began to be felt virtually from the moment the shock Leave referendum victory emerged on the night of 23 June 2016 when David Cameron was still prime minister.That night saw the largest daily slump in the value of sterling on record, as financial market traders frantically sold the UK currency in anticipation of a drastic economic divorce between Britain and the rest of the Continent.Between 23 and 27 June 2016, sterling declined by 11 per cent against the US dollar and 8 per cent against the euro.That crash instantly pushed up the price of imported goods.Analysts at the London School of Economics have estimated that, as a direct result of this record-breaking currency depreciation, UK consumer prices increased by 2.9 percentage points in the two years following the referendum and that this translated into an £870 per year increase in the cost of living for the average UK household.Our Supporter Programme funds special reports on the issues that matter. Click here to help fund more of our public-interest journalismThe other almost instantaneous impact of the Brexit vote was a slump in business investment, as many firms cancelled their expansion plans amid confusion over the UK’s future trading relations with the Continent.The deadlock in Parliament after the 2017 general election over what form Brexit should take, if any, ensured that business investment remained extremely weak.If investment by firms had continued rising at its pre-referendum rate it would have been some 10 per cent higher by the end of 2019.The Brexit vote also seems to have deterred overseas companies from investing in the UK, or from expanding their operations here.Analysts at the University of Sussex’s UK Trade Policy Observatory in 2018 estimated that the Brexit vote reduced the number of foreign investment projects in the UK by between 16 and 20 per cent.Business investment contributes to the economy in two ways. First, it boosts aggregate spending, which helps drive income and jobs today. Second, it boosts the long-term productive capacity of the economy, which produces higher incomes and more jobs tomorrow. Historically, investment by multinational companies – the sort that has been especially weak since 2016 – has proven highly beneficial in the latter respect.This all means that, by crushing investment, Brexit will have not only have hampered economic growth relative to where it would otherwise have been since 2016, but will also continue to be a drag for many years into the future.Many economists have sought to quantify these negative impacts. Before the pandemic struck last year, a host of studies examined the impact of Brexit on the overall economy with so called “doppelganger” modelling exercises.These involved examining how the UK gross domestic product had grown in the wake of the Brexit vote relative to other peer economies (France, Germany, Canada, the US and so on) with whose performance UK growth had historically been reasonably tightly correlated.Because the UK was the only major country that had voted to rip itself out of a deep economic and regulatory relationship with a vast neighbouring trade bloc, any divergence in performance between the expected UK performance and the actual performance could reasonably be attributed to the Brexit vote.A number of these studies, using different baskets of comparator economies, showed a gap in the UK’s economic performance opening up after the referendum as a result of lower business investment and the impact of the sterling slump on household spending.£400-800mEstimated weekly damage done by Brexit vote to UK economy by end of 2019And these studies indicated Brexit damage by the end of 2019 of between 1 and 2 per cent of GDP, or between £20bn and £40bn. That, to put it in the terms favoured by the Vote Leave side during the referendum campaign, equates to a loss of between £400m and £800m a week.Economists at the University of Warwick performed a similar doppelganger modelling exercise, but examining the impact of Brexit on the UK’s regions and districts.They found a considerable amount of variation, with those UK areas that had relatively large Leave votes in 2016 and significant numbers of low-skilled workers suffering more than others. The pandemic over the past 12 months has played havoc with those doppelganger exercises using comparator countries because the impact of Covid has been so enormous and varied around the world.Yet Thiemo Fetzer, one of the Warwick researchers, argues the massive shock of 2020 will not have changed the picture of underlying economic damage to the UK from Brexit.“Covid is obviously going to confound a lot of these things but I think the trend will be very similar,” he says.And what of the impact of actually leaving the single market and the customs union since 31 December?We do not yet have the data to estimate the impact on the overall economy, but there have certainly been problems at the borders for UK firms.British goods exports to the EU slumped by a record amount in January. They rebounded in February but still remain considerably below where they were in the average of previous years.The Centre for European Reform think tank has run a doppelganger modelling exercise, examining and comparing other countries’ trade patterns since the start of this year, that suggests Brexit has reduced UK goods exports by 11 per cent, or £7.7bn relative to where they otherwise would have been.How do these near-term estimates of the cost of Brexit fit with the long-term projections of how leaving the EU will ultimately damage the UK economy?A host of these studies have estimated moving from EU membership to a simple free trade deal – as the UK has done – will permanently damage UK GDP by between 4 and 6 per cent in the long run relative to where it otherwise would have been.This is a result of higher trade barriers with Europe damaging UK industry and holding back our national productivity growth.Read more special reports from our Supporter ProgrammeSo how much of this economic damage has already been felt and how much is still to come?It’s impossible to be certain, but the Office for Budget Responsibility, the Treasury’s official forecaster, at the time of the March 2021 Budget estimated that around two-fifths of the total damage had been inflicted so far due to the investment slump.So if the long-term Brexit cost is assumed to be 4 per cent of GDP (as the OBR projects), that implies 2.4 per cent of GDP damage is yet to be felt, or around £48bn.To put this in the context of the UK’s 66 million-strong population, the cost of Brexit so far on average is around £480 per person, with a further £720 of pain to go.And this, by the way, is including estimates of the benefits of any new tariff-lowering post-Brexit free-trade deals the UK might conclude with the likes of America or Canada. Even the recently signed Australia trade deal is predicted by the government to boost GDP by only 0.02 per cent over 15 years.Why do these trade deals not make much difference? Because we do so much of our trade with the EU (around half) that any increased trade with these other countries cannot, arithmetically, compensate for the significant expected foregone trade with Europe.“Almost all economists expect a further hit to income growth as trade with the EU becomes more costly,” says Thomas Sampson of the London School of Economics.“Trade models suggest it could take a decade for the economy to fully adjust to Brexit.”The size of the Brexit economic impact cannot, of course, be predicted with any pinpoint accuracy. But all the mainstream analysis is unambiguous in suggesting that it will be negative and large. And that will feed through to our living standards in the form of weaker job creation and slower income growth than otherwise.But will it be recognised? Politicians, as we’ve seen in recent months, will likely seek to blame other factors, from Covid to a lack of flexibility from the EU in applying their import regulations.And some Brexit voters might insist they haven’t experienced any economic pain personally if they have managed to keep their jobs or perhaps are retired.“The problem is you don’t know how the UK would have unfolded if it hadn’t been for that vote,” says Mr Fetzer.“Brexit is death by a thousand needles, it’s not an earthquake. You don’t hear about each of the pricks of the needle.” More

Boris Johnson has dismissed a warning that “hundreds of thousands of people” will die from tropical diseases because of his aid cuts – despite it coming from the World Health Organisation.The prime minister also refused to grant an early vote on the controversy, despite being ordered by the Commons Speaker to allow MPs to have their say.Tory rebel Andrew Mitchell protested that the cut would lead to a staggering 280 million drugs, tablets and vaccines being “burnt and destroyed” – writing off Britain’s past investment.“This one act will lead to the maiming, blinding, disruption of lives and deaths of hundreds of thousands of people,” the former International Development Secretary warned.But Mr Johnson – while noting Mr Mitchell’s “expertise” on the subject – nevertheless insisted he was wrong about £4bn-a-year aid cuts.Pointing to the aid budget still standing at £10bn, despite the economic emergency caused by the pandemic, he told the MP he did not “accept the characterisation” he had given.“People of this country should be very proud of what we are achieving,” the Commons was told.Earlier this month the Speaker Lindsay Hoyle attacked Mr Johnson for refusing to allow the vote promised last year – because, the rebels say, he faces certain defeat.Mr Mitchell urged the prime minister to “accept and respect” the Speaker’s instruction with a “meaningful vote” before the summer recess, starting in late July.But, instead, Mr Johnson referred only to a general “estimates” vote – on all government spending – which would not be a specific clash on the aid cuts.The World Health Organisation warned last week that 280 million lifesaving tablets are likely to expire and have to be incinerated, because UK aid money has been stopped.It will leave millions of the world’s poorest people at risk from so-called “neglected tropical diseases”, including elephantiasis, trachoma and Guinea Worm.They are easily preventable but, without treatment, “kill, blind, disfigure and maim”, WHO warned.It is among numerous bodies agencies alarmed by the impact of slashing aid from 0.7 to 0.5 per cent of national output – breaking a Tory manifesto pledge and, possibly, the law.The Tory rebels are demanding that the aid cut is reversed from the start of next year, but ministers have hinted it will last for much longer than that.In April, the foreign secretary Dominic Raab, asked if the cut must be for one year only, to comply with the law – if no fresh legislation is passed – replied: “I don’t think it is quite as straightjacketed as that.”And he repeated that funding would only be restored “when the fiscal situation allows” – amid huge pressure to hike spending on social care, education and elsewhere. More

Campaigners and opposition politicians have told Priti Patel to get her “own house in order” after she warned UK nationals had been denied access to benefits and services in EU countries.The home secretary said there had been reports of Britons “asked for residence documents they do not need to hold, being prevented from accessing benefits and services, and having trouble with their right to work”, in an article for the Daily Telegraph.Ms Patel called on the bloc’s members to fulfil their obligations towards UK nationals “just as the UK has done for EU citizens in the UK”.And she claimed the UK’s EU settlement scheme (EUSS), which closes to applicants next week, had been a “success”. But Dr Dora-Olivia Vicol, CEO of the charity the Work Rights Centre, said the experiences highlighted by the home secretary “mirror the exclusions experienced by EU nationals in the UK”. “To some extent, this is due to employers’ misunderstanding of the EUSS, and particularly of how to check the status of EU nationals whose applications are still being considered,” she said. “But the Home Office can do more to process the backlog, and to moderate employers’ instinct to reject job applicants and staff who are waiting on an EUSS decision. Furthermore, we should remember that thousands of EU nationals with pre-settled status are currently being denied Universal Credit, despite the assurances made years ago.”Liberal Democrat home affairs spokesperson Alistair Carmichael said:  “British citizens in the EU have been living under a cloud of uncertainty for five years. The Liberal Democrats and others have consistently urged the Government to prioritise protections for these Brits, but our pleas have fallen on deaf ears.“Having failed to secure the full rights of Brits in Europe, it is rich for Priti Patel to now lecture EU countries, while she is inflicting so much anxiety and uncertainty on EU citizens here in the UK.“She and Boris Johnson promised EU citizens that their rights would be protected, but they have broken that promise. Hundreds of thousands are still waiting for the Home Office to tell them if they can stay beyond the end of the month, and even those who have been granted Settled Status are being denied the physical proof they need.“Instead of empty whining about what EU countries are doing, the Home Secretary should get her own house in order. She must honour her promise to EU citizens by removing her arbitrary deadline and giving them the automatic right to stay, with physical proof.”The Home Office has been approached for comment. More

The British government won’t extend the June 30 deadline for European Union citizens in the U.K. to apply for permanent residency or risk losing their right to live and work in the U.K.Britain’s departure from the EU last year ended the automatic right of people from the bloc to settle in the U.K., and of Britons to live in the 27 EU nations. As part of the divorce, both sides agreed everyone would keep the residence rights they had before Brexit In Britain, that means citizens of the EU and several other European countries must apply online for confirmation of their “settled status” if they want to continue to work, study or receive social benefits.The U.K. government says there have been 5.6 million applications since the program opened in March 2019, only a handful of which have been refused. That is far more than the government’s pre-Brexit estimate that about 3 million EU citizens lived in Britain. The number of EU residents in Britain who have not applied is unknown.“I want to be clear — we will not be extending the deadline,” Immigration Minister Kevin Foster said Wednesday. “Put simply, extending the deadline is not a solution in itself to reaching those people who have not yet applied and we would just be in a position further down the line where we would be asked to extend again, creating even more uncertainty.”The government says people who have applied by the end of June will be sent letters giving them 28 days to act. People will also be able to apply after the deadline if they had “reasonable grounds,” such as an illness that prevented them doing it sooner, Foster said.EU citizens’ advocates worry that some people are still unaware they need to apply, while others are caught in a backlog of 400,000 applications that have yet to be processed.They also want the British government to provide physical, rather than just digital, proof of residents’ status. Many fear a repeat of the traumatic experience of thousands of Caribbean immigrants who settled in the U.K. after World War II only to be denied jobs and medical care or even threatened with deportation decades later because they did not have paperwork to prove their right to live in Britain.Alberto Costa, a lawmaker from Britain’s governing Conservative Party who has campaigned on behalf of EU citizens, said Prime Minister Boris Johnson had assured him that no eligible resident “will be denied their rights.”“I will do everything in my power to ensure the government honors its promises to those citizens,” he said.Other EU countries have made similar arrangements for the estimated 1 million U.K. citizens who reside there. In some, right to remain is being granted automatically while in others British citizens have to apply.Free movement for people among EU member states is a core principle of the bloc, and Britain’s 2016 vote to leave was, in part, a reaction to high levels of immigration. More than 1 million EU citizens moved to the U.K after eight formerly communist eastern European countries joined the bloc in 2004. More

Education secretary Gavin Williamson has criticised schools which close “far too early” in the day just weeks after ministers unveiled a Covid catch-up programme which did not include extending pupils’ hours.Mr Williamson hit out at secondary schools he said were finishing at 2.45pm or even earlier. The education secretary also hinted his department could crack down on the practise, saying he did not want it to “continue”. His comments come just weeks after the government’s education Tsar quit warning a plan to help students catch up after the pandemic did not go far enough.Sir Kevan reportedly asked for £15bn to be spent on the programme. Instead ministers announced just a fraction of that budget. Sir Kevan is also thought to have called for 100 extra hours of teaching per pupil – including for sports, music and the arts. A longer school day was not included in the plan, although ministers said they would continue to look at the issue. Mr Williamson told the Commons Education Committee today: “We do have, sadly, a number of schools that are finishing too early in my view and I don’t want to see that continue.”Historically there had been “very little information published” on the issue, he said, but more work was being done to “build up a lot more evidence” on the benefits of a longer school day.He said he was “very concerned” at secondary schools closing at 2.45pm or 3pm or even earlier.He added: “On average, secondary schools are open for as long on average as primary schools. But in the post-16 environment, actually the average amount of time spent actually declines.”We’re the only country in Europe where you see that difference and I think that actually sort of presents some concerns and some worries.”He also said university leaders should ask themselves “very searching questions” if some of their courses were not “opening doors” into employment for students.Mr Williamson also warned that exams were unlikely to return to normal by next year. He said “adjustments and mitigations” would likely be required to ensure fairness.He told MPs: “We very much hope and intend for exams to go ahead in 2022 as well as vocational technical qualifications as well.”We’re considering what we need to do to ensure that there’s fairness and there’s the right level of support for pupils.”Asked if he expected adjustments to be required next year and possibly in subsequent years, he said: “I very much expect there to be …adjustments and mitigations to be put in place because I think that those youngsters who currently are in year 10 and year 12 will have obviously suffered disruption as a result of the pandemic. So I think that you don’t have a situation of immediately switching back to the absolute sort of same.. situation as it was back in 2019.”He told the committee he would “far prefer to see children sitting exams”, but added: “We very much recognise that we can’t predict what we are going to be facing over the coming years”. More

The government is facing criticism and ridicule after it emerged schoolchildren are being made to sing a bizarre patriotic song in between classes. The Department for Education this week announced it would encourage schools to celebrate One Britain One Nation Day, which is says is on 25 June.Celebrations for the event include singing a song called the “OBON Day Anthem 2021”, which ends with the children repeatedly chanting “Strong Britain, Great Nation”. It also includes the chorus: “We are Britain and we have one dream, to unite all people in one great team”.And it refers to Britain having “widened our island’s shores” – an apparent reference to territorial expansion reminiscent of Land of Hope and Glory.Critics said the flag-waving felt “un-British” and mocked the government for pushing “weird made-up rituals”.”Boris Johnson’s barmy brainwashing event, where he wants children to sing a silly song without any history or tradition, feels the most un-British celebration of Britain ever,” said Daisy Cooper, the Liberal Democrats education spokesperson.”Parents didn’t ask for it. Wales wasn’t consulted and Scottish school children will be on holiday. There’s nothing One Britain about it. “What children need and parents are asking for is real investment in our children’s futures with a fully-funded catch up plan – not weird made-up rituals.”The song was also derided by Tory MP Caroline Nokes who tweeted a preview of the tune and said: “I can’t unhear this (however fervently I wish I could)”.The SNP’s Angus MacNeil added to the chorus of criticism on Twitter, branding the song “imperial stupidity.”The Department for Education said in a statement that it was “encouraging schools across the UK to celebrate One Britain One Nation Day on 25 June, when children can learn about our shared values of tolerance, kindness, pride and respect”.The event is organised by One Britain One Nation, a group that says it wants “to create, a strong, fair, harmonious and a proud British Nation, celebrating patriotism and respect for all our people”.The group, which claims the song was written by schoolchildren in Bradford, says its mission is “to promote the concept of responsible citizenship; to instil a sense of personal pride in all our citizens of being British and create a real sense of collective Identity regardless of one’s background”.The campaign was launched by former policeman Kash Singh and those backing it include actress Joanna Lumley, Northern Ireland Secretary Brandon Lewis and Conservative peer Norman Tebbit. More

The UK needs to be prepared for a potentially “significant flu epidemic” this winter but can “counter” the issue with seasonal flu shots, a government scientific adviser has said.Professor Neil Ferguson, who last week said the country was at the beginning of a third wave of Covid, suggested seasonal influenza would “likely be a significant issue” towards the close of 2021.His comments echo those of England’s chief medical officer, professor Chris Whitty, who warned last week about the possibility of returning to a conventional flu surge or a “very significant Covid surge” in the winter.And speaking earlier this week, Boris Johnson also suggested there could be a “rough winter” with pressures on the NHS for “all sorts of reasons”, including flu cases.Pressed on the comments from professor Whitty and whether conventional flu likely to a bigger problem due to low levels in 2020, professor Ferguson said: “I think seasonal influenza is likely to be a significant issue coming into the autumn and winter because all the measures we adopted against Covid around the world drove flu to very low levels.”“We can counter that with seasonal flu shots which will be rolled out in the autumn, but I think we do need to be prepared for a potentially quite a significant flu epidemic probably late this year, early next year.”However, professor Ferguson, a member of the government’s SPI-M modelling group, struck a more upbeat tone on the current Covid situation, saying the overall picture was “encouraging”.“We are seeing as we expected rises in case numbers across the country, but they have slowed slightly compared with a couple of weeks ago.“We’ve seen rises in hospitalisations and indeed in deaths, but again they are at a much lower level compared with cases than they were previously, demonstrating the high effectiveness of vaccines in protecting people, particularly against severe illness”.But he declined to be drawn on whether the government should lift remaining Covid restrictions on 5 July — the date set by the prime minister to review the situation — or 19 July when Mr Johnson said he hopes to ease all measures in England.“I don’t think I have a personal view on which is preferable,” professor Ferguson told BBC Radio 4’s Today programme.“I’m busy analysing the data going through. One of the purposes of the delay was to allow scientists such as myself to analyse the data and provide a more conclusive picture to government to make that decision. That data is proving encouraging but I would want to speculate on which data is more appropriate.”While government ministers have played down the prospect of easing restrictions in England on 5 July, the prime minister and his cabinet ministers have insisted it is “looking good” for the 19 July — something Mr Johnson has referred to as the “terminus point”.According to The Times, ministers have been encouraged by low numbers of deaths from Covid-19 and are optimistic remaining restrictions, including social distancing and face coverings, can be lifted next month. More

Five years ago Wednesday, Britons voted in a referendum that was meant to bring certainty to the U.K.’s unsettled relationship with its European neighbors.Fat chance.Voters’ decision on June 23, 2016 was narrow but clear: By 52% to 48%, they chose to leave the European Union It took over four years to actually make the break and the former partners are still bickering, like many divorced couples, over money and trust. And five years after a fractious referendum campaign that sparked family arguments and neighborhood disputes, Britain is still as split over Europe as ever.“Britain is still significantly divided over the merits of Brexit ” said polling expert John Curtice of the University of Strathclyde. He says voters are split almost exactly 50-50 between “remain” and “leave” supporters, and relatively few have changed their minds since 2016.“Over four in five people still say that they would vote exactly in the same way as they did five years ago,” Curtice said.The country is also split on whether Brexit has been a success. In 2016, Brexit campaigners claimed leaving the EU would not only restore British sovereignty, but save the country money. Notoriously, campaigners emblazoned a double-decker bus with the claim that Brexit would give the U.K. an extra 350 million pounds ($486 million) a week to spend on its beloved national health service. The U.K.’s net contribution to the EU was actually about half that much.Prime Minister Boris Johnson s Conservative government insists that Brexit is bringing new economic opportunities. Britain recently signed its first full post-Brexit trade deal, with Australia, and has applied to join a trade partnership of Pacific-rim countries. But Britain’s trade with the EU, which before Brexit accounted for about half of all imports and exports, plummeted by 20% after the U.K. made a full economic break at the end of 2020, although the disruption from the coronavirus pandemic makes it hard to tell how much of that impact is from Brexit.Jonathan Portes, professor of economics at King’s College London said Brexit will be “a significant but not catastrophic” drag on U.K. economic growth for many years. “Not a blowout, but a slow puncture,” he said.The referendum ended the career of then-Prime Minister David Cameron, who had championed staying in the EU and quit soon after. His successor, Theresa May, tried and failed to strike a divorce deal that both the EU and Britain’s Parliament would accept and resigned in 2019.The two most prominent Brexit champions have had mixed fortunes. Former U.K. Independence Party leader Nigel Farage arguably did more than anyone to make Brexit happen, but never won a seat in Parliament despite repeated attempts. He founded, and then left, the Brexit Party, and remained in the public eye as Britain’s most vocal supporter of Donald Trump. He is currently out of frontline politics.Johnson, who led the official “Vote Leave” campaign, became prime minister in 2019 by promising to “get Brexit done” after years of wrangling. He succeeded in leading Britain out of the EU — and straight into another crisis, the coronavirus pandemic.He leads a nation divided over more than just Brexit. Far from bringing the U.K. together, Brexit has frayed the bonds between the different parts of the United Kingdom. It has increased support for independence in Scotland, which voted in 2016 to remain in the EU but had to leave the bloc when the rest of the U.K did. It also has destabilized Northern Ireland, which borders EU member Ireland, by imposing new trade barriers between it and the rest of the U.K. that have angered Northern Ireland’s pro-British unionist community.As for the divorced couple itself, Britain and the EU are squabbling, with Britain urging the bloc to show flexibility and the EU threatening legal action unless the U.K. sticks to the Brexit agreement.British Brexit minister David Frost, who led negotiations for the U.K. side, said Tuesday that many Brexit supporters like him were surprised at how rocky the relationship had become.“It’s not something that we want,” he said. “The sooner we can move beyond the settling-down process the better.”___Follow all AP stories on Brexit at https://apnews.com/hub/Brexit. More