On June 24 2019, the third anniversary of the Brexit
referendum, the party responsible for gifting the referendum to the UK was enjoying
a tortuous process of electing its second post-referendum leader with a mandate
from 160,000 party members to be Prime Minister.
In the interim, the Conservative Party had been spooked
by the electoral consequences of missing two exit deadlines (29 March as well
as the 12 April extension). It suffered
substantial losses in English Local Government elections (2 May) and again in
elections to the European Parliament (23 May).
Another failure to meet the exit deadline is seen as potentially
calamitous for the party of Government.
For this reason a General Election is low on Conservative MPs’ priority lists.
Will Boris Johnson’s new Administration succeed in
divorcing the UK from the EU at Hallowe’en 2019, “come what may” “do or
die?”
Will he deliver on his campaign
pledges on public expenditure? And will
he deliver on the objectives of Brexit, whatever they are, more than three
years after the mandate to get out?
Other
crucial questions remain unanswered regardless of the weeks of leadership
campaigning and pledging.
How can “the party of business” justify divorcing
the UK from the EU when the authoritative research still predicts negative
consequences? What evidence does the new
PM have to rebut the plethora of data which show that leaving the EU will be
bad for the UK?
As the nation begins a fourth post-referendum year still
a member of the EU, Parliamentary democracy has laboured in a quagmire of
resignations, political indecision, and electoral rebuff at local government
and EU polls for Labour and Conservative Parties; compounded by business
anxiety, community division and speculation over the spectre of constitutional
break-up.
This analysis is supported in recent polling by
think-tank Britainthinks. It suggests
that “bitter political debate over leaving the EU has shattered public trust in
the way the nation is governed.[i]”
Voters on both
sides of the argument – the general public - feel frustrated and alienated from
the political system as the public discourse has affected the UK’s self-image
and reputation abroad. Where has it all
gone wrong?
Answers are needed if Government has any chance of
resolving the discord about a “red white and blue Brexit” that wracks “the
precious union.” It’s arguable that
Brexit has been flawed from the start - a combination of poor leadership,
non-evidence-based policy-making, ignoring expert analyses, illegal electoral activity,
telling lies, and the absence of a strategy to implement and to monitor the
process of divorce.
The time is opportune to brief the new PM, to give him
time to take stock of facts - to remind him firstly how we got to where we are,
and secondly, to present recent evidence of Brexit’s impact on the UK
economy, impacts on Northern Ireland,
and finally the impacts on Ireland.
1. H.M Parliament’s
lead role
·
In stark contrast to the unbridgeable division
which has dominated Parliamentary debate subsequently, the European Referendum
Act was passed in December 2015 overwhelmingly. In so doing, its elected law-makers set no
threshold for a victory or for a minimum turn-out. In practice, therefore, a simple majority which
comprised of less than 2/5 of the nation’s voters sufficed as the legal basis
for the UK’s constitutional change. The vaunted figure of 17.4 million people
who voted in June 2016 to leave represents 38% of the UK’s total electorate of
46.5 million. Some 29.1 million people
did not vote for Brexit.
·
The validity of the referendum result remains
open to dispute because of the Electoral Commission’s finding in July 2018 of
electoral fraud. Exactly one year on
from the breaking of the Cambridge Analytica scandal by a UK newspaper, we were
reminded[ii] in March of the Electoral
Commission’s conclusion that Vote Leave broke UK electoral law in funnelling
money to the data firm Aggregate IQ.
Consequently Vote Leave was fined and referred to the police.
·
Whereas the Scottish Government published a
650-page report[iii]
informing its electorate about the prospect of independence prior to its
referendum, no such detail was published by Westminster to inform the Brexit
campaign.
·
Post-referendum the same approach has
prevailed. The Department responsible for the UK’s departure from the EU
carried out no economic impact assessments on any sector of the UK
economy. The then Secretary of State for
Brexit David Davis admitted this to a House of Commons Select Committee in
December 2017.[iv] Is failure to base policy on evidence maladministration
or incompetence?
2. Impacts
on the UK economy – recent analysis
·
The evidence published during the last nine
months suggests that the citizens of the UK will be worse off economically as a
result of Brexit, whether the divorce is hard or soft. In November 2018, the UK Government’s own
analysis[v] reported that
Brexit will cause adverse impacts ranging from 3.9% shrinkage of the economy
after 15 years to 9.3% under a no-deal exit.
In similar vein, the CBI warned in January 2019 that the risks of a
no-deal are unmanageable.[vi] In February 2019 the Bank of England[vii] produced data indicating
the UK’s lowest growth since 2009. The Bank Governor spoke about the sharp fall
in business investment in the “fog of Brexit.”
The Office of National Statistics endorsed[viii] the Bank’s research
saying that adverse impacts are already happening in February 2019 before
Brexit happens. For example, in the
final three months of 2018 production of cars, steel products and construction
fell sharply; and the UK’s GDP shrank by 0.4% in December.
·
Also in February 2019, a no deal impact
assessment published by Government [ix] said that no deal could
leave the UK economy 6.3-9% smaller after 15 years than if it remained in the
EU, and that no deal would affect the viability of many businesses in Northern
Ireland some of which might relocate to the Republic of Ireland. It repeated HM Treasury’s assessment of
November 2018 that the overall impact of no deal is expected to be more severe
in NI than in GB and that it will last longer.[x] In addition, it said that the Northern Ireland
agrifood industry is particularly vulnerable because of its reliance on
cross-border supply chains.
· On 5 March 2019, it was reported that
manufacturing investment in the UK’s motor industry has slumped by 80% since
2016.[xi]
·
Evidence of the detriment which Brexit is
producing prior to divorce emerged from Government plans to protect the
shipping of medical supplies in the event of a no deal.[xii] Not only has the Government had to pay £33m,
but it appears that the award of contracts to three companies (one of which had
no ferries) dispensed with requirements for competitive tendering. In Government Audit parlance, this is
maladministration. It inspires little confidence in Government administration of Brexit. Lord MacPherson of
Earls Court, a former Permanent Secretary to the Treasury described the payment
as “the latest example of systemic abuse of the taxpayer.” The botched RHI scheme in N Ireland could be
another example of abuse of British taxpayers.
·
Further recent evidence of a downturn in the
national UK economy shows that in May 2019 manufacturing output as measured by
the PMI (purchasing managers index) slipped to its lowest level since July
2016.[xiii] Clients in Asia and
Europe are reported to be diverting supply chains away from the UK.
·
And on 18 July 2019, the Office of Budgetary
Responsibility spelled out the damaging economic impacts of a no-deal
Brexit.[xiv] It forecast that no deal would plunge
Britain into recession with 2% shrinkage of the economy, unemployment would
exceed 5%, and house prices would fall by 10%.[xv] As a result instead of the £29bn of borrowing
required by leaving with a deal, almost £60bn of borrowing would result from
leaving without a deal.
3. Regional
impact – Northern Ireland, recent evidence
·
The CBI report in January 2019 showed that a
no-deal Brexit would cost Northern Ireland £5 billion over the next 15 years.[xvi] In February 2019, Northern Ireland’s largest
bank, Danske Bank, expressed grave concerns about the impact of a hard Brexit,
warning that no-deal Brexit posed the greatest threat to Northern Ireland’s
economy for a generation.[xvii]
·
And the business consultancy EY warned that
Northern Ireland could slide into recession losing 11,400 jobs in 2020 alone as
a result of a no-deal Brexit. EY added
that in the event of a trade deal being reached between the UK and EU, growth
in the UK as a whole and in NI will still be outpaced by the Republic. It forecast Ireland’s growth for 2018 at
8.3%, reduced to 3.9% in 2019 and 3.2% in 2020.
Its NI forecast is for economic growth in 2018 of 1.5%, slowing to 0.9%
in 2019 and 1.2% in 2020.
·
More recent evidence of Brexit’s adverse
impacts both on the regional economy of Northern Ireland and on the national
economy has been produced by the National Institute of Economic and Social Research
in May 2019.[xviii]
NIESR’s report finds that a soft Brexit
with the UK being part of a Customs Union arrangement will shrink Northern
Ireland’s economy by 3.3% over a decade; that the UK economy would shrink by 3%
per year; a no-deal Brexit would double that impact; and “there will be fewer
resources to pay for public services.”[xix]
·
In June 2019, a report [xx] commissioned by NI’s
Department for the Economy[xxi] from WTO officials provides
“sobering” evidence of the detrimental impacts of, among other things, EU
tariffs on food exports to Ireland and the ability of small enterprises with no
experience in customs procedures to continue to export to Ireland. The report
also states[xxii]
that border inspection posts would be necessary on the Irish side to meet EU
requirements in the event of a no-deal Brexit.
·
The journalist Tony Connolly[xxiii] takes account of authoritative
briefings, including the warning in March 2019 from the Head of the NICS of
“severe profound and lasting consequences...and no available mitigation against
severe consequences of No Deal,” and explains why the NICS commissioned the WTO
report. Thus he articulates the
calamitous impacts on NI should the new PM divorce the EU without a deal.
·
On 10 July 2019 the Department for the
Economy published a report described by the BBC’s NI’s Economics and Business editor
as the most strident warning yet about Brexit.
It says that[xxiv] a no-deal Brexit could
put 40,000 jobs at risk in Northern Ireland especially in agri-food and
haulage; it warns that exports to Ireland could fall by 11-19% including the
danger that most agri-food trade, valued at £832m, would stop; and many
businesses will no longer be able to export to Ireland.
Given the DUP’s “Confidence and supply” support for the
Conservative Government, much of this empirical evidence listed above has been
sent by this correspondent to his DUP MP seeking the evidential basis for that
party’s hostility to the EU.[xxv] A reply is still awaited.
Do the Conservative Brexiteers, their DUP allies and
Labour Brexiteers know more than HM Treasury, the Bank of England, the Office
of National Statistics, the National Institute of Economic and Social Research
and the Office of Budget Responsibility combined? And where is their counter evidence?
With the DUP’s consistency in voting against the
Withdrawal Agreement, one might speculate whether their overriding priority of defending
“the precious union” is reciprocated by UK taxpayers. A Kings College London opinion poll[xxvi] in April 2019 indicated
only one-third of people in Britain hope that NI would vote to remain in the
UK. And a YouGov poll of Conservative
Party members in June 2019 shows that 59% would prefer to see Northern Ireland
split from the UK if it secured Brexit[xxvii] and 63% prefer to see
Scotland independent.
4. Impacts
on Ireland – recent evidence
Little serious account seems to have been given in Great
Britain of Brexit’s impact on its neighbours.
In March 2019 a report by the Economic and Social Research Institute
quantified the scale of disruption that Brexit will create in Ireland in all
cases, deal as well as no deal.[xxviii] Ten years after Brexit the cost to Ireland’s
economy would range from E8 to E15 billion. The report predicted that
agriculture and food processing will receive the worst impact. Given that these industries operate on an
all-island basis, the impact on Northern Ireland is self-evident.
One loss for the UK, however, seems to be an advantage for
Ireland’s economy. A report in March
2019 shows the detrimental business impact of Brexit on the UK as hundreds of
companies relocate to the EU[xxix], with Dublin “the clear
winner.”
Despite the varying claims from the long list of aspirant
leaders of the Conservative party about their plans to resolve the UK/EU border
problem – in particular claims that the border can be managed through some kind
of new technology, the Government’s own expert (the head of the “UK Border
Delivery Group”) informed NI business[xxx] in April 2019 that new
technology is not a solution in the short to medium term.
The contradiction between the inviolable pledge that won the Brexit campaign - to take back control of the UK’s borders - and
the sacrosanct promises emphasised at Prime Ministerial hustings by Boris
Johnson - to keep the UK’s only European land border open - is not lost on the
Irish public, north and south of the UK/EU border.
©Michael McSorley 2019
[i]
Observer 16 June 2019 “Divided, pessimistic, angry: survey reveals bleak mood
of pre-Brexit UK”
[ii]
Observer 17 March 2019 Carole Cadwalladr The Cambridge Analytica Files
[iii]
Scotland’s Future. Your Guide to an independent Scotland. 648pp. November 2013
[iv]
The Independent 6 Dec 2017
https://www.independent.co.uk/news/uk/politics/david-davis-brexit-impact-assessments-uk-economy-sectors-industry-eu-withdrawal-mps-select-committee-a8094481.html
[v] BBC
News 28 November 2018 “EU Exit: Long-term Economic Analysis” https://www.bbc.co.uk/news/uk-politics-46366162
[vi]
BBC News 30 January 2019 https://www.bbc.co.uk/news/business-47054439
[vii]
BBC News 7 Feb 2019 Bank forecasts worst year for UK since 2009
https://www.bbc.co.uk/news/business-47155537
[viii]
BBC News 11 Feb 2019 https://www.bbc.co.uk/news/business-47196387
[ix]
BBC News 26 Feb 2019https://www.bbc.co.uk/news/uk-politics-47379308
[x]
BBC News 26 Feb 2019 https://www.bbc.co.uk/news/uk-northern-ireland-47379948
[xi]
BBC News 5 March 2019 https://www.bbc.co.uk/news/business-47457219
[xii]
The Times 2 March 2019 p4 “Incompetent Grayling urged to resign over £33m
Eurotunnel bill.”
[xiii]
Belfast Telegraph 3 June 2019 https://www.belfasttelegraph.co.uk/business/brexit/uk-manufacturing-plunges-into-decline-after-brexit-stockpiling-drive-ends-38174121.html?utm_source=newsletter&utm_medium=email&utm_campaign=BT:DailyNews&hConversionEventId=AQEAAZQF2gAmdjQwMDAwMDE2Yi0yMjJiLWJkZGYtYzk4ZS0zNjE2M2VhYjRmOTPaACQ2ODY4YTI0Mi0yZDllLTRiMGMtMDAwMC0wMjFlZjNhMGJjZWLaACQ3YzFkZDZlNy04Y2RiLTRiOTktYjM0Yi1hMjVhOWI1NDJlNjchxLT37SjyxJ8Ilypo9iqlk_gBuU6OWKlR00ufVdBChQ
[xiv]
BBC News 18 July 2019 https://www.bbc.co.uk/news/business-49027889
[xv]
Observer Toby Helm 21 July 2019 pp 6-7
[xvi]
Irish Times 22 January 2019 https://www.irishtimes.com/news/ireland/irish-news/no-deal-brexit-could-cost-northern-ireland-5-7bn-over-15-years-1.3765874
[xvii]
Belfast Telegraph 1 Feb 2019
https://www.belfasttelegraph.co.uk/news/northern-ireland/bank-warns-nodeal-brexit-biggest-risk-to-northern-ireland-economy-for-generation-37773679.html
[xviii]
Belfast Telegraph 10 May 2019 https://www.belfasttelegraph.co.uk/news/northern-ireland/customs-union-to-cost-ni-900-a-year-for-every-person-report-38096786.html
[xix]
NIESR 8 May 2019 “The Economic Impact on the United Kingdom of a customs union
deal with the European Union.”
[xx]
WTO report June 2019 The Irish Land Border: Existing and Potential Customs
Facilitations in a No-Deal Scenario, drawn up by Eric Pickett, a German lawyer
specialising in EU customs and WTO law, and Michael Lux, head of unit in the
European Commission’s customs division for 25 years
[xxi] Belfast Telegraph 12 June 2019 Mark Bain
https://www.belfasttelegraph.co.uk/news/brexit/sobering-brexit-report-lays-bare-perils-for-northern-ireland-firms-of-nodeal-38210851.html
[xxii]
https://www.bbc.co.uk/news/world-europe-48602075
[xxiii]
RTE News 14 June 2019
https://www.rte.ie/news/analysis-and-comment/2019/0614/1055418-double-whammy-a-no-deal-brexit-and-northern-ireland/
[xxiv]
BBC NI news 10 July 2019 https://www.bbc.co.uk/news/uk-northern-ireland-48934706
[xxv]
https://michaelmcsorleyeconomy.blogspot.com/2019/03/brexit-briefings-to-dup-mp-jan-feb-2019.html
[xxvi]
Belfast Telegraph 3 April 2019 https://www.belfasttelegraph.co.uk/news/brexit/survey-only-third-of-britons-want-northern-ireland-to-stay-in-uk-brexit-pressure-on-union-37979514.html?sfns=mo
[xxvii]
Belfast Telegraph 18 June 2019 https://www.belfasttelegraph.co.uk/news/brexit/poll-most-tory-members-would-sacrifice-northern-ireland-for-brexit-38229896.html
[xxviii]
RTÉ News 26 March 2019 https://www.rte.ie/news/ireland/2019/0326/1038584-esri-brexit/
[xxix]
Irish Times 11 March 2011 “The Brexodus: Dublin attracting big business from
the City of London” https://www.irishtimes.com/business/financial-services/the-brexodus-dublin-attracting-big-business-from-the-city-of-london-1.3821678
[xxx]
Belfast Telegraph 17 April 2019 https://www.belfasttelegraph.co.uk/business/uk-world/technology-cant-prevent-hard-border-in-ireland-if-brexit-means-customs-controls-firms-told-38021795.html?utm_source=newsletter&utm_medium=email&utm_campaign=BT:DailyNews&hConversionEventId=AQEAAZQF2gAmdjQwMDAwMDE2YS0yYWY5LTFkNmItYTczYi0yZTE2M2U4MDgxYTXaACQxZmU0NTFlNi03ZmY0LTQ4MDYtMDAwMC0wMjFlZjNhMGJjZTXaACRjNjc5YmNkYS0yZDg1LTQ2NDEtYWMyYi0zZTMwMzUyMDQwYjgQ_ts5GBbPTnh8ZaYVs9RLfCQfX22d8FbG4seQEPGhVw
