As we hit the ten years since the referendum, so there has been much written reflecting on the success or otherwise of Brexit. We need to delve further back in time and explore the reason for Brexit happening.
How has the value of the pound been affected?
The evidence is clear with regards to what has happened to the value of the pound since Brexit.
Measuring the value of the pound against the dollar, in early 2014, before the idea of a referendum had even been put forward by the government. the pound was worth about $1.70.
It then began to fall sharply as talk of a referendum grew, before falling very quickly in the immediate aftermath of the referendum, eventually falling as low as $1.20 by 2017. It then rallied slightly to about $1. 40 by 2018, before dropping again to $1. 20 during the first Covid lockdown and as low as $1. 10 during the aftermath of Liz Truss’s disastrous mini-budget in September 2022.
The pound is currently at $1.40 still well below the figure in 2014.
This has had a detrimental effect on British people going abroad, finding that their pound can purchase considerably less than it could 12 years ago, while it has also been noted that, ” exporters – who typically benefit from a weaker currency because their products become cheaper for overseas buyers – failed to take advantage as uncertainty clouded trade appetite “.
How has growth been affected?
It has been calculated by the Office of Budget Responsibility that the UK has had to borrow more money since Brexit, for the simple reason that the UK is on track to take a 4% hit to national income over the next 15 years as a result of the Brexit vote.
This has made borrowing more expensive, with the result that any government in this country has less money to spend on vital services, such as health, education and social care.
How has trade been affected?
One of the biggest ways by which the UK has lost out has been in the area of trade. The EU is still our biggest trading partner UK trade in numbers (web version) – GOV.UK but Brexit has meant that our growth of trade-lead exports has slowed in comparison with the rest of the G7.
Indeed, our goods trade-to-GDP ratio is now consistently lower than that of the rest of the GDP. This has resulted in a loss of revenue for the country, including a loss of tax money which could be spent on vital public services.
How has investment been affected?
For an economy to grow and for a government to have more tax money to spend, so there must be investment. However, the problem we have had with this since the referendum is that investors like economic and political stability.
John Springford, of the Centre for European Reform, has commented: “The investment strike started in 2016 and continued through to 2021-22, and then it started to rise again once certainty about the trading relationship impact on productivity. It means workers don’t have the best kit, and existing capital [equipment and buildings] is deteriorating, so you certainly assign some of the GDP losses to that.
“Brexit is more a story of stagnation, and a slow puncture, than of recession and rising unemployment.”
How has employment fared?
It has been calculated that employment in the UK is about 5% down on what it would be without the UK having left the European Union and trails other similar countries by 4%. This fall in employment has been accompanied by a stagnation in wages.
Meanwhile it is the young who have particularly suffered unemployment due to Brexit. It has been noted that the number of young people not in education, employment or training (NEETs) has now risen to over one million for the first time since 2013.
Should we wish for a return to 2012?
With all the doom and gloom and the evidence being clear that Brexit has failed, it is perhaps understandable that many people wish that we could just turn the clock back to the day before the referendum or perhaps to 2012, when the Olympic Games in this country seemed to be such a success.
This would be a mistake as those who have a rose-tinted view of the years leading up to the referendum seem to be oblivious to the reasons why the referendum vote went the way it did in the first place.
Clearly David Cameron, when calling the referendum thought that the Remain side would win and he would repeat his (narrow) success of the Scottish Referendum in 2014, by solving an awkward problem by winning a referendum, as it would silence the hostile Eurosceptics in his own party.
This was of course found to be far too optimistic an idea as the Leave side won, resulting in Cameron resigning the morning after the referendum and the Tory Party subsequently tearing itself to pieces, suffering a huge defeat in the 2024 General Election.
Cameron seemed to be in a state of blissful ignorance in the run-up to the referendum, happily unaware and uninterested in the damage that the austerity policies pursued by himself and the Chancellor George Osborne since 2010 had done to the country.
While there are those who will cite racism as the main contributing factor to the Leave vote, I really don’t think that there is any coincidence in the fact that the vote came after a brutal and wholly unnecessary period of government austerity from 2010-16.
So those who wish us to return to 2012 or early 2016 are missing the point; while they may have been doing alright and happy to be in the EU, millions of their fellow British people were struggling and seeing the social fabric of the country around them falling to pieces. They were then sold a false prospectus that leaving the EU would somehow magically put everything right and the rest is history as they say.
If there are lessons to be learnt from what has undoubtedly been the national disaster of Brexit, there are surely two in particular that stand out.
Firstly, it was a mistake to leave the EU. It is surely notable that despite the predictions back in 2016, no other EU country has followed suit.
However, it was also a mistake for the country to go through the needless austerity it went through in the years leading up to the referendum, which left people so desperate and alienated from the political classes that they decided to give them a good kicking as they thought that things couldn’t get any worse.
Our society must be made more equal and fairer. This will mean appropriate levels of wealth taxation and public ownership as well as a serious effort to close the health, wealth and education gaps between the north and south.
To paraphrase a political figure, who didn’t do enough to challenge the injustices in our society, we perhaps need to be both hard on Brexit and hard on the causes of Brexit.
