economy

The Economic Reality of Brexit

Brexit, economy, Labour Party

The Independent reports today that a majority of voters believe the economy will be negatively affected by Brexit.

The last few months have proven difficult for the Government’s economic policy, with Philip Hammond engaging in what appears to be damage limitation, rather than enthusiastically embracing the so-called “opportunities” which Brexit promised. However, last week was when the economic impact really began to hit home.

Firstly, it emerged that there was no guarantee that Britain’s membership of some 65 EU trade deals would roll-over during the transition phase, potentially leaving the UK subject to EU trade rules without any of the benefits. Indeed, some non-EU member states such as Chile, who would have to agree to the UK remaining in trade deals, are already demanding concessions from the Government on issues such as agriculture.

On Monday, stock markets tumbled with the FTSE 100 falling 1.9%. Most economists indicated that this was a correction and not a cause for concern in itself, given recent market stability. However, it could indicate a more volatile global economy in the future with some alarm bells already sounding.

On Wednesday the Government’s regional impact assessments of Brexit were leaked, revealing an 8% drop in GDP if we crash out of the EU with no deal, and a 5% drop under the Government’s preferred option of a bespoke trade deal. Even leaving the EU and remaining in the Single Market will cost us 1.5% of GDP. To give you an idea of what this means in reality, UK GDP growth hit -2.5% at its peak during the 2008/9 recession.

Of course, these impact assessments are based on models, predictions and assumptions. However, most Government policy, especially economic policy, takes into account an impact assessment so that ministers can make an informed decision about what is likely to happen as a result of said policy.

A responsible Government would not push ahead with any economic policy when faced with such dire numbers, especially when the global economic outlook is somewhat less certain than it was in 2016.

It’s time for the Government to come clean about the true cost of Brexit, and let voters decide for themselves whether it is really worth it.

Honeyball’s Weekly Round-Up

Danny Alexander, economy, Miliband brothers

The weekend papers were dominated with op-ed pieces about the labour leadership election. The gloves are off and the papers are focussing on the Miliband brothers: “David hoped Ed wouldn’t stand. Instead he became his greatest rival”, was the Guardian’s headline yesterday. The other candidates have been all but forgotten as the same article’s stand first read: “Battle of the Milibands’ approaches its finale. But who will win?” 

Similarly today’s Sunday Mirror has an interview with both candidates. The quick fired questions put to them by the papers political editor, Vincent Moss provide great insight into where each brother is coming from.

His interview is the most revealing yet. It moves away from a simple comparison of the policies each are so passionate talking about and which you can read all about in the Guardian. Moss’ interviews however, delve much deeper into the brothers’ personalities – he asks each brother what they think of the other and if it’s true they haven’t spoken for some weeks. It’s the most revealing interview I’ve read throughout the entire campaign. You can read it here.

In other news, a reduction in the nation’s tax burden has been ruled out by the chief secretary to the Treasury, Danny Alexander, who revealed the news in his first national paper interview.

They will stay at this level for quite sometime he says, but as we already know the emergency tax budget in June hit the poorest worst. The country’s leading tax experts branded the budget in June as “clearly regressive.”

Another ‘charge’ of unfairness will hit the coalition government tomorrow when the centre for economics and business research report reveals that there will be an “agonising transition” for the north of England economy which estimates that one in 10 people will be unemployed in the north of England between 2010 and 2015. This compares with just 7% in the south-east and 8% in the south-west.

You can read Danny Alexander’s interview in today’s Observer here.