The Centre for European Reform, CER, has issued its latest analysis on Brexit and the UK economy.
Who are CER?
The Centre for European Reform is an award-winning think-tank devoted to making the European Union work better and strengthening its role in the world. CER is pro-European but not uncritical.
They regard European integration as largely beneficial but recognise that in many respects theUnion does not work well.
They also think that the EU should take on more responsibilities globally, on issues ranging from climate change to security.
CER aims to promote an open, outward-looking and effective European Union.
What their analysis reveals.
CER’s new research says Brexit is already costing the UK £500m a week. This is in stark contrast to the leave campaign’s promised £350m a week dividend, infamously displayed on the side of the big red bus, that the campaign said would be diverted instead to the National Health Service.
CER’s report also suggested that had the UK voted to remain in the EU, austerity measures would now be nearing completion.
It also shows that the UK economy is already 2.5% smaller than it would have been had Remain won the referendum.
The figure of £500m a week is arrived at by their analysis that the UK’s public finances have been dented by £26bn a year and the figure is growing. This equates to half of the UK’s overall defence budget.
The study also found the UK is now the slowest growing advanced economy among its peers.
The report stated,
“The UK has grown by 3.1% over that period. (Since 2016). Compare that to the average of the 22 most advanced economies: 5.2% – which amounts to a 2.1% gap, not far away from our estimate of the cost of Brexit.”
CER examined the costs of Brexit to the UK up to the end of June. It said that their findings were a central estimate and did contain a margin of error.
The research was based on a model created on how the economy would have done if the remain vote had won. An estimate produced earlier in the year suggests the economy was 2.1% smaller that it would have been in the first quarter of the year but was updated for the second quarter and showed the gap had grown.
The model also suggests that had Britain not voted to leave, the deficit would be down to just 0.1% of GDP, or £2bn. It would mean the austerity drive in place since 2010 would be all but complete.
As the Tory conference begins in Birmingham, Theresa May has again come under pressure from competing cabinet ministers over her plans for a Brexit deal.
With Brexit talks hitting an impasse with the EU new claims that the boss of one UK-based carmaker has been flown by private jet to meet President Emmanuel Macron, in an attempt to persuade the company to move manufacturing to France after Brexit has been met with concerns from the Confederation of British Industry.
Carolyn Fairbairn, its director general told the Observernewspaper, this development was a sign of the damage Britain faces from the wrong deal.
“Among car manufacturers, we have heard of one CEO who has been flown out on private jets to meet Macron about relocating his entire business,” she said. “You have got tens of millions being spent by firms on preparing for friction at borders.
With some ministers now pushing for a Canada style deal, a loose trade deal, there is growing support for Mays ministerial team for a deal that would keep Britain closely tied to the EU for a limited period.
The warning to May is that a Canada style deal would be little better than crashing out of the EU with no agreement in place for many businesses.
Fairbairn went on to say,
“One of the reasons that the government’s proposals are on the right track is that they will mean no friction at borders. This is what the Canada deal does not do. It does not do it in some really fundamental ways. For some of our members, it is not much better than a no-deal outcome.”
What are the concerns for business?
A YouGov poll of 1,000 entrepreneurs and chief executives, carried out by the People’s Vote for another referendum, suggests the Tories risk denting their pro-business reputation over the handling of the Brexit talks.
Almost three-quarters (73%) believe Britain is heading for a bad deal.
Dominic Grieve, the former attorney general, said it suggested the party was “jeopardising its reputation for economic competence with the business community as a result of the way Brexit has unfolded”.
Meanwhile, the Wellcome Trust, Britain’s wealthiest funder of independent scientific research, says it is losing patience with the government.
The Trust’s director, Jeremy Farrar, in an article for the Observer, states that in common with industry and universities, his organisation – which spends more than £1bn a year on medical research – is increasingly nervous.
“No deal would leave a void on access to funding, regulation and, critically, migration. Wellcome wants to support researchers, wherever they are from, in order to tackle the greatest global health challenges. But if the conditions and the culture here are damaged that will affect our support. It is not unconditional.”
Meanwhile, large companies such as Airbus and BMW have warned of potential lay-offs and operation closures if the UK crashes out of Europe without a deal.
Several major organisations are now moving their operations from Canary Wharf to Europe as a result of Brexit. The European Medicines Agency, (EMA) will be relocating to Amsterdam and will take up operations by 30 March 2019 at the latest.
Reports also say the European Banking Authority will move to Paris and Barclays will move up to 50 investment bankers to Frankfurt.
This follows a prediction by the Bank of England last year that Brexit could cost 75,000 finance jobs.
Many people on both sides of the vote would have understood that Brexit would take a lot longer than 2 years. Some believed it would take at least 10 years or longer. However, it was still quite shocking to hear one of the most prominent Brexiters, Conservative MP Jacob Rees-Mogg, saying we should see the benefits of Brexit in about half a century.
He said, “We won’t know the full economic consequences for a very long time. The overwhelming opportunity for Brexit is over the next 50 years.”
That is a very long time. For many it is a lifetime.
Amid the overwhelming predictions that our exit from the EU – slated for 29 March – will be disastrous, analysis by the former president of YouGov found demographic changes mean around half a million fewer people each year, or around 1,350 a day, now support Brexit – meaning there will soon be enough to overturn the Brexit vote if there was a second referendum. The estimate is that by the March 2019 deadline, there will be at least 100,000 more people in the UK wanting to remain in the EU than leave it.