Ten years after the Brexit vote, the economic damage is becoming increasingly clear. According to a paper by Stanford economist Nick Bloom and others for the US National Bureau of Economic Research, UK GDP per head is as much as 8% lower than it would have been under a remain scenario. Investment is close to 18% lower, employment as much as 4% lower, and productivity up to 4% lower.
The reasons for this disaster, as former Labour cabinet minister Alan Milburn argued at the launch of his review into youth worklessness, stem from the pursuit of easy solutions to hard problems. Brexit was sold as a simple fix, but it opened a Pandora's box, imposing permanent negative costs on the economy. The years of political uncertainty froze business investment, faltered trade, and stalled growth.
Leavers who say Brexit was botched may have a point, but achieving the benefits forecast by leave-supporting economists would have required building a Singapore-on-Thames economic model, for which there was no public majority support. Tax cuts incompatible with cash-starved public services and a bonfire of EU regulations, such as allowing hormone-treated beef imports, were non-starters for most voters.
Geopolitical shifts have also undermined the Brexit vision. Closer ties with the US are now anathema under Donald Trump, and tensions with China and war in the Middle East have exposed weaknesses in global trade. Forging closer economic ties with near and politically aligned neighbours makes increasing sense, spurring calls to rejoin the EU.
However, as former Bank of England policymaker Danny Blanchflower noted, rejoining is far from simple. It would require thousands of negotiators and agreement on terms. The lesson from Brexit is clear: there are no easy solutions, and simplistic promises lead to disaster.
