A new UK government promotional film urges Britons to “get going” in the preparations for the sunny uplands of Brexit. With upbeat music and forward arrows, the film urges businesses and individuals to prepare for the nation’s new start, now less than six months away. And yet anyone looking into the details of the proclaimed economic advantages will see that what is most on offer are rising costs and extra bureaucracy.
In truth, Brexit was never an economic issue for those who championed the cause. It was about political sovereignty. As such it will deliver for those who wanted a new immigration system controlled by the British government. It may even — though this is far less certain — deliver for the fishing communities that were promised a new settlement outside the Common Fisheries Policy. But while these political gains, for those who see them as such, may be realised, the government has so far failed to come even close to demonstrating how Brexit will bolster the nation’s economy.
Indeed the latest initiatives demonstrate that the Brexit envisaged by Boris Johnson’s government will add costs and bureaucracy to British business. Anyone wading through the latest 206-page document on preparations will find details of new paperwork and extra infrastructure, while the supposed economic upside looks more fanciful than ever. Officials acknowledge that it will lead to 215m extra customs declarations and £7bn in extra costs — costs to be borne by businesses already struggling to recover from the coronavirus shutdown. An extra 50,000 customs agents are likely to be needed to handle the rise in regulation.
Individuals traveling to the EU face increased costs of holiday insurance, higher data roaming charges, and more regulation should they wish to travel with their pets.
Much has been made of the UK’s new freedom to strike trade deals but these will do little to raise gross domestic product while the inevitable restrictions on trade with the EU can only reduce British exports to its largest market. While a US trade deal is predicted to add 0.16 per cent to the nation’s GDP and free trade agreements with Australia and New Zealand will have an even more negligible impact, exit from the EU’s single market and customs union will, according to Treasury forecasts, knock 5 per cent from GDP over the next 15 years.
Even assuming the UK and EU do finally manage to secure the minimal zero tariff, zero quotas, businesses will not escape the need for checks on product standards and rules of origin requirements. This does not begin to cover other crucial deals still required around areas such as data services and finance.
Downing Street believes Brexit will force UK exporters to become more productive and competitive. But, again, this benefit is theoretical and not best served by loading businesses with extra burdens. The much-vaunted freeports championed by Rishi Sunak, the chancellor, were already possible within the EU. In any case they are less likely to boost UK GDP than displace jobs and investment from one region to another.
The more the government talks of economic benefits, the more apparent it becomes that these opportunities are conceptual while the disadvantages are all too apparent. The economic case for Brexit was tacked on relatively late to counter the arguments of the Remain side. It did the job but its hollowness is now being exposed.
Britain is about to discover the hard way that while Leavers were sincere in many of their political beliefs about Brexit, their economic arguments were, and are still a costly and damaging sham.
By the FT editorial board
