Daniel Hannan MEP, Vote Leave, before referendum
“What I am proposing cannot mean membership of the Single Market”
Theresa May, PM, after referendum
So how much is Brexit going to cost?
The simple answer is that nobody knows.
In some ways, this is understandable – trying to add up the bill is tricky when it’s based on forecasts of events which may or may not happen. But it is striking that we appear to be heading towards Article 50 notification without our Government having any detailed figures for what the price tag is likely to be. Or, if they do know they are not telling us…
What we do know for certain is that it is going to cost us a lot. The “£32bn Brexit bonanza” the Daily Express claims we’ll receive is never going to appear. The £350m a week that Vote Leave promised to the NHS on the side of their campaign bus wasn’t true, and nor was the £450m a week Change Britain boldly claimed more recently.
These figures are inventions. They assume we can just stop funding things without making any alternative arrangements. It’s like saying you can save money by stopping your mortgage payments, without acknowledging that you’ll need to do something to replace it, such as a cheaper mortgage or renting a home instead of owning it.
Owen Paterson MP, Vote Leave, before referendum
“Both sides in the referendum campaign made it clear that a vote to leave the EU would be a vote to leave the Single Market.”
In the immediate aftermath of the referendum result, the pound fell to its lowest level in decades, and has dropped pretty much every time the Government makes an announcement about Brexit.
The pound has lost about a fifth of its value since the referendum, and is expected to fall further, particularly if a hard Brexit looks likely. This will make all imports more expensive, and probably affect the price of local produce as well, because of the increased cost of buying fuel and raw materials. While a weaker pound should result in increased exports — because buying goods from us is cheaper — this hasn’t really happened, so we’re losing money.
Prices in the shops are already starting to rise. We may all see our food and fuel bills rise by 10% or more. Inflation is going up, and there are expectations that interest rates will go up, increasing mortgage costs. At the same time, we are seeing forecasts of little or no wage increases for the next decade.
The UK’s credit rating has been downgraded as a result of the vote, and may go down again. This affects the cost to the Government when it borrows, and may on its own outweigh the supposed saving to be made from stopping payments to the EU. Pension funds are being hit. Investments are being scaled back or cancelled, research funds are being held up while investors wait to see what is going to happen.
All this has happened before we’ve even started the process of leaving.
When we leave the EU, it will cost us at least £18bn to pay off our share of outstanding bills and liabilities. [Update: latest estimates put the leaving cost at €40-60bn, that’s £34-£50bn at the current exchange rate.]
But things are much worse if we leave the Single Market.
If we leave the Single Market and customs union, we will see a stampede of UK businesses relocating overseas. Companies base themselves here because it gives them a springboard to Europe. We have arrangements that allow our service industry to sell across the whole continent. Car manufacturers build cars here using parts from across many countries, and the aerospace industry does the same thing. Putting up barriers across the border makes it extremely difficult for them to continue to operate here. The exodus is already starting, with Lloyds of London announcing it is leaving. Nissan, Honda, Tata Steel: all these companies are reconsidering their positions.
It’s estimated that leaving the Single Market and customs union could ultimately cost the UK around £75bn a year. That’s more than £1,000 a year for every person living in the UK, or more than seven times as much as we pay to the EU. We’ll look in a later article at how these changes, trumpeted as being new opportunities for our businesses to build a global platform, are not actually welcomed by UK businesses.
As Vote Leave economist Patrick Minford himself admitted during the referendum campaign, it would likely mean an end to manufacturing in the UK. Later articles on this site show how it could also mean an end to the NHS as we know it, and an end to the UK as a powerhouse of science and research.
What does our new Department for International Trade have lined up to replace our industrial, financial and service sectors? Jam.
So if you have a job, or are out of work, if you are saving for a pension, or have a mortgage, if you have a car or eat and drink, you’ll be worse off after Brexit.
If you work in manufacturing, in the motor industry, in aviation, in farming, fishing, retail, energy, science, research, health, pharmaceuticals, higher education, the banking sector or financial services, in fact pretty much any sector, your job is going to be very insecure.
You’ll have flat wages while all your bills continue to rise, and you’ll probably have to work longer until you retire as well.
While all this is happening, your basic protections, environmental, employment, safety, consumer laws, are likely to be reduced.
But Theresa May is prepared to go further in damaging the UK. In a speech on 17th January, she announced that, if the EU doesn’t meet her negotiating demands — demands they have said all along they cannot agree to — then she will turn the UK into a tax haven.
At a stroke, she would set us at odds with our closest neighbours and business partners, destroy trust in the UK, and turn us into a business pariah. If this happens, it would mean the end of the UK’s social structure, public services, the NHS and the benefits system, and a tearing up of a large part of our environmental, consumer and employment protections. We’ll cover this in detail in a later post.
However you voted, you surely didn’t vote for this.