The UK government should stop messing around

The UK government should stop messing around

Barack Obama said “don’t be stupid”. (Actually, he said something even louder.) That’s still good advice. This is particularly good advice for today’s UK. It would be wonderful if he could start doing sensible things. But you have to keep your hopes in check. It should be possible to stop doing really stupid stuff though.

Brexit itself was a dumb thing. Few people with serious knowledge of the matter doubt this. It has erected barriers against the country’s closest neighbors and most important trading partners. As the Office for Budget Responsibility noted this month, “the latest evidence suggests Brexit has had a significant negative impact on UK trade.” It has reduced the overall volume of trade and the number of business relationships between UK and EU companies. The OBR assumes, quite rationally, that “Brexit will result in the UK’s trade intensity being 15% lower in the long run than the UK remained in the EU”. Meanwhile, ‘global Britain’ has evaporated as hopes for closer trade relations with China and the United States have faded.

While Brexit was dumb stuff, so is the idea that there is an easy way to get back to a closer relationship with the EU. A renewed membership is inconceivable. It’s not just because it would exacerbate political civil war in the UK. It is also because EU members are too sane to trust the UK to be an enthusiastic member of the EU as it is and is likely to be. From their perspective, the sight of the UK wading outside is a useful lesson in the dangers of going out. Equally important, Brexit allowed the EU to move forward faster than it would have faced the usual obstruction from the UK.

Most of the alternatives to full membership – such as joining the single market, the customs union or both – would also reignite the Brexit civil war, in both major parties. These options are also obviously worse than membership, since they would give obligations without having a say in the rules. Moreover, once again, the EU has good reason not to trust the UK: its behavior on the Northern Ireland protocol surely proves it.

Bar chart of real GDP per capita* growth, 2016 to 2022 (%) showing that the UK is among the growth laggards since Brexit

Trying to change the main characteristics of the current unhappy relationship is useless. But that can’t justify making things worse. It is, for example, a fundamental conservative principle that one only changes if there is no good alternative to do so. Change is itself costly. So what sense can there be to the ‘detained EU bill’, a plan to ‘revise or revoke’ up to 4,000 pieces of EU-derived legislation that form the basis of much of national life today? It will simply increase uncertainty and the costs of doing business.

Sensible companies do not want to operate under a multiplicity of different regulatory regimes. This was the logic of Margaret Thatcher’s single market plan, which Brexiters remain apparently unable to understand. This type of plan should make the UK less and less “investable”. The dismal statistics on British investments do not belie this fear.

Bar chart of investment share of GDP (%), average from 2016 to 2022 showing the UK's investment share of GDP is exceptionally low

What would have been a positively sensible approach for UK policymakers? Surely he would have started from a realistic view of weaknesses and priorities. Consider the difficulty of building on undeveloped land, the failure to make buildings more energy efficient, persistent regional inequality, overcentralization of government, chronically low national savings and investment rates, the the inability of pension funds to invest in the productive capital of the country, the inability to build world-class companies and the long-standing inability to raise skills to a sufficiently high level.

None of this had anything to do with the EU. But all this had long been “too difficult” to do anything about it. So instead we have Brexit as an exercise in diversion, culminating in the spectacle of Liz Truss and Kwasi Kwarteng, which was as untimely and irresponsible as it was intellectually meaningless. It was Brexit as performance art in its purest form.

You see a snapshot of an interactive chart. This is probably because you are offline or JavaScript is disabled in your browser.

I have little hope that this government will do anything positive before the next general election, especially in the midst of an energy and inflationary crisis. But it’s not too much to ask him to stop doing stupid things. So don’t consider regulatory changes unless they’re clearly for the better. Don’t promise migration control you can’t deliver. Don’t stick to the option of divergence on food standards, which makes resolving the Northern Ireland issue so intractable. But strive to preserve the ability of our scientists to cooperate closely with their European peers. And above all, stop the incessant barking of the British bulldog.

Tackling big problems now may be impossible. But, even if the government is now in a deep hole, it can at least stop digging it deeper.

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