Most forms of Brexit will worsen the country’s finances and reduce space for new initiatives to address child poverty, social care and left-behind communities that some argue drove the Brexit vote, a report has found.
Academics at the UK in a Changing Europe thinktank found a positive outcome depended on politicians being able to move on from the Brexit impasse and focus on longer-term challenges including productivity, regional imbalances and democratic reform.
In their report, The Brexit Scorecard, they rated the success and prospect for success in areas including the economy and public finances.
“Most forms of Brexit will worsen the government’s fiscal position, probably significantly, reducing the space for new policy initiatives,” it said. “Not only has there been no end to austerity, despite some rhetorical gestures, but pressures on public services, in particular social care, education and policing, have intensified. While Brexit is not the main driver here, it has certainly not helped.”
The report said the government’s planned spending review was likely to be postponed and “the impacts of Brexit on regions and sectors are, if anything, likely to disadvantage those which are already lagging behind”.
It concluded that the opportunity to “reset” Britain, promised in the referendum three years ago, had been missed with the outlook for the economy deemed negative and prospects for taking back control of the country uncertain.
Anand Menon, a professor of European politics and foreign affairs at King’s College London, said: “No one could claim that progress so far has been an unmitigated success – but it’s up to politicians to make it a success in future.”
Leaving the EU without a deal should not be judged by the windfall from no longer contributing to the EU budget, the report said. There are many unknowns including the potential cost of policing future closed borders for immigration and trade.
“Any savings would certainly be far outweighed by the fiscal costs of a disruptive no deal,” it said, concluding that the impact of Brexit on the economy was currently “negative” and the outlook was also “negative”.
The scorecard found little had changed since 2016 in terms of the openness of the UK economy and it was “too early to tell” if this would change post Brexit.
The EU’s trade deal with Japan has had a positive effect and there has been some relaxation on non-EU immigration rules since 2016, it noted. “But the UK has become less attractive in terms of trade and investment flows, and to migrants from within the EU,” the report found.
On the economy it concluded that the last three years had been negative with the decline in the value of sterling and failure of wages to keep up with inflation.
“Looking forward, it is less a question of whether Brexit will be damaging economically, but the extent of the damage, with a ‘no deal’ exit posing particular risks,” it said, scoring economics in Britain as negative now and negative in the future.
The poor outlook for the economy has had a knock-on effect on “fairness”. The change in distribution of wealth, employment and services was deemed neither positive or negative but “mixed”.
“A fair Brexit would be one that helps those who have done worst in recent decades, and promotes opportunity and social mobility.”
While the academics felt it was too early to tell if the imbalances in society would change, they found “there is little evidence to date that Brexit has spurred fresh thinking on these issues”.
Moreover, there is little evidence that the circumstances of those who feel left behind has changed and little evidence that they are going to.
“The pressure on the public finances arising from the negative economic impact of Brexit will make it more difficult for the government to address these issues. Perhaps most seriously, there is little evidence to date that Brexit has spurred fresh thinking on these issues, still less action.
“Looking forward, it is difficult to be optimistic about the economic impacts,” the academics said.
The report added, however, that there was “certainly potential” for Brexit “to increase citizens’ control of the decisions affecting their lives” and for the economy and immigration policy to become more open.
Jonathan Portes, a professor of economics and public policy at King’s College, London, said: “Many hoped that Brexit would be a ‘reset moment’ that would force the British political system to address long-neglected structural issues, both economic and social.
“So far, that opportunity has been missed; whether that can change will determine the long run success of Brexit.”
Despite historical claims by hard Brexiters, the report found “there was little or no evidence that EU regulations generate a major drag on productivity growth”.
