Stopping Brexit won’t take the economy back onto its pre-referendum path

Nick Clegg’s latest article on how to stop Brexit, and the OECD report on Britain arguing that reversing Brexit would boost UK growth, prompted this post.

The OECD writes:

“In case Brexit gets reversed by political decision (change of majority, new referendum, etc.), the positive impact on growth would be significant.”
Nick Clegg writes:
“…it is parliament that can save us from the fate of Brexit and, at last, I now believe it will.”

On economic grounds this would be a good idea, as almost all economists would testify.  I would therefore gladly try whatever it is that Nick Clegg is smoking to experience the state of mind in which one believes/forecasts that Parliament will intervene.  One can conceive of scenarios in which Brexit were stopped – at least for the moment – although they seem very far indeed from the most likely outcomes.

But doing so would not take the economy back to its pre-EU-referendum path.

That referendum has widened a previously narrow fault line in UK politics, fractured both main parties, and caused an evacuation of the political centre-ground.  [Ground which has become an object of satire via the ‘centrist Dad’ meme].

Even if Brexit were stopped, the next ten or twenty years would be a tense fight between the two main parties, and the factions within them, over our future relationship with Europe.

As a consequence, uncertainty over that relationship, and thus the terms on which those who invest in capacity in the UK can trade with Europe, would be here to stay.  A further consequence is uncertainty over the shape of other aspects of public policy, resulting from the Brexit fracture.

For example, the consensus about the border line between the private sector and the state have been broken.  The prospect of that line being drawn and redrawn over the next generation may also weigh on the attractiveness of the UK as as place for doing business.  (Up to a point, the moving about of the line probably matters more than where a stable border line is drawn).

Brexit, halted or not, has also changed the set of paths on which the relationships between Northern Ireland, Scotland and England are likely to travel along, very likely not to the economic benefit of any of them.

This uncertainty is aggravated by the fact that the centre party – the Liberal Democrats – has been greatly weakened, and by the fact that centrists in both major parties seem to have weakened relative to those further left and right.  A loss of power by one party triggers a take-over by a new party much further from the incumbent than would have been the case before Brexit changed everything.

Unless ‘stopping Brexit’ coincides with Brexiteers figuring out that Remaining is in the UK’s economic self-interest, or abandoning the political ambitions for separation that they were prepared to pay the economic price for, it would not turn the clock back for the UK.

Neither Clegg nor the OECD say that stopping Brexit would work such a miracle, but it’s easy to extrapolate from their words to this effect.

 

 

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One Response to Stopping Brexit won’t take the economy back onto its pre-referendum path

  1. am says:

    ProjectFearMark2 began more or less as soon as ProjectFearMark1 failed.

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