westernwind 

The driving force behind Brexit was the desire to control and be responsible for our own affairs again, rather than contracting out ever-increasing swathes of our regulatory and political powers to a bureaucracy in Brussels. Our politicians may be rubbish, but no more so than the EU politicians, and at least we can vote out UK politicians. Why add extra layers of supranational control?

Very True, but...

westernwind 

Do you think US citizens would want to sign up for a treaty that gave the citizens of 20-plus other countries an effectively unconditional right to live in the US? That gave those countries the right to make legislation for the US, whether or not the US wished it? That gave them power over the trade policy of the US?

Obviously the answer to this is No, but comparing the UKs position with Europe and the US positions with a non-existent theoretical example is different. One is very small in comparison to the other in almost every way, and is highly dependent upon their much larger neighbor. The other is one of the largest and most resource rich countries on the planet.

While I will be the last person to defend the USs attitude and treatment of the rest of the world, the attitude of the majority of the American population is because of the position the US holds and has held for the last century. The UK on the other hand, may not like the rules of the EU, but if you need economic trade with them to have a flourishing economy, you may have to accept those rules. What is the alternative?

The news I get from family and friends in the UK paints a bleaker picture than you do. Shortage of goods not because of covid supply constraints but because there aren't enough truck drivers. Shortage of nurses in hospitals. Impending split of Scotland from the UK. But with a news media that can't be trusted, and politician's who openly lie all the time, who knows what is true and what isn't.

Great conversation.

Quoting 

One is very small in comparison to the other in almost every way, and is highly dependent upon their much larger neighbor. The other is one of the largest and most resource rich countries on the planet... The UK on the other hand, may not like the rules of the EU, but if you need economic trade with them to have a flourishing economy, you may have to accept those rules. What is the alternative?

EDIT: Wow, I went on a bit there. Apologies.

TL;DR - Only 8% of UK GDP is related to trade with the EU; trade is still flowing and the economic hit is minor; letting your country be managed by a continent-wide bureaucracy with an agenda that voters can't control will end in tears; we had the courage to take a vote, we're out, and that's how democracy works.

================

You are right to question, and I don't doubt your friends and family are sincere in their beliefs, but I am afraid they have been misinformed rather badly. Active trade between the British Isles and Europe goes back literally thousands of years, to pre-Roman times. The period of our membership of the EU, particularly from the 1990s onward, is a drop in the ocean of our history of commerce with the continent. We didn't need an organisation like the EU to develop and maintain flourishing trade with Europe for the 3,000 years or so leading up to 1973. We don't need it in 2021.

However, despite that long history, the UK is by no means "highly dependent" on the EU, economically, militarily or, post-Brexit, politically.

On economics, bear in mind that you're comparing the UK, which is a nation state, with the EU, which is a customs union of 27 countries. The UK is not a minor country in the context of Europe. Despite the talk about the UK being a small island blah, blah, blah, of those 27 countries only Germany is clearly larger than the UK in terms of its economy and population, with France being the most obvious comparator. Each of the 27 countries of the EU has different cultures, histories, strengths and weaknesses. This is one reason why the EU has problems getting things done. You think New Mexico and New Hampshire don't have much in common? Think about, say, Sweden and Greece: both are EU members, but they could hardly be more different.

Nevertheless, combined exports to the 27 countries of the EU account for only 8% of the UK's GDP. This is not "dependent" by any stretch of the imagination. The largest export destination country for the UK is actually the US, followed by Germany. Conversely, the UK is the second largest export destination for EU goods. (Do we therefore say that the EU is dependent for its exports on the UK? No. That would be crude and simplistic. Also, it doesn't fit the narrative that the media like to push, of which more later.)

So what has been happening to exports from the UK to the EU, that 8% of the UK's GDP? Well, the impression you get from the pro-EU faction (what used to be called Remainers, now probably better described as Rejoiners) is that trade with the EU has come to a screeching halt. That's not the case at all, nor was it ever going to be the case. Exports and imports are still flowing steadily. After a rocky start to 2021 (as expected, after the beginning of "Brexit proper" with the introduction of the new trading regime), exports of goods to the EU are back up to pre-Brexit levels on a monthly basis (useful summary in this thread). On a cumulative basis, exports in the first half of 2021 declined, and COVID has of course had an impact, but the tide has clearly turned.

Naturally, Brexit cuts both ways: it affects the EU, not just the UK. Imports of goods from the EU to the UK also declined in the first half of 2021. Imports to the UK from outside the EU have increased, because UK companies, such as major retail chains, are looking outside the EU to find substitutes so that they can avoid the additional red tape related to imports from the EU. Britain has always been a trading nation with historical links to all four corners of the globe for commerce, so this is something in which it has centuries of experience. On the other hand, the situation for EU suppliers to the UK is going to get a lot worse when the UK phases in tariffs and checks for EU imports in 2022. (The EU has already imposed these checks and tariffs on goods it imports from the UK.) That's an opportunity for domestic suppliers, or suppliers from outside the EU. German machine tools too expensive or inconvenient to source after Brexit? Fine, buy Japanese or Swiss.

Clearly these trade barriers are not a great outcome for either side, but the EU didn't want a zero-tariff agreement. Because the EU has a trade surplus in goods with the UK, the countries of the EU are suffering more in absolute terms, and that's the result of a political choice on their part. Longer term, exports to the EU as a proportion of the UK's total exports have been falling steadily. If I remember correctly, the EU represented close to 60% of the UK's exports 15 years ago, and that's fallen to around 50% today. That's not surprising given that Europe is a region of low economic growth, so over time it's likely that the EU as a percentage of the UK's exports will decline further as the UK trades more with more rapidly growing economies.

We've talked a lot about trade, but were there other benefits to EU membership? There's little hard evidence for this, but the single market is the most obvious place to look. Even the EU's own research, which naturally tries to emphasise the positive, acknowledges that the UK benefited far less than other EU nations ( summary here, based on EU figures here. I don't see many advantages at all, to be honest, but I see many costs (in addition to the billions of pounds that the UK literally paid for EU membership every year). For one thing, when we were members, trade with the EU affected only 8% of the UK's GDP, but any regulations imposed by the EU applied to 100% of the UK's GDP.

Imagine you're a baker in a country town in England who sells bread only to local inhabitants. You'd think the EU would have nothing to do with your business, right? Wrong! In fact EU regulations governed many aspects of that bakery's operations (even down to what kind of light bulbs it could use), and the UK didn't have a choice as to what EU regulations it accepted and what it rejected. In reality, many other countries basically ignored EU regulations they didn't find convenient, whereas Anglo-Saxon UK implemented them.

Personally, my view is that the majority of regulations beyond a certain hard core are essentially harmful to the economy and civil society, and that any country should look at new regulation from a default perspective of not accepting it, or accepting new regulations only if it first abolishes some existing regulation. Others will disagree. The more you lean to the left, politically speaking, the more you'll like regulation, until at one end of the scale you get Communism, where the state attempts to regulate everything. The EU isn't communist, but it loves regulation because that's where it power lies, so it tries to regulate everything it possibly can.

Here's an example. Two days ago the EU announced regulations for, get this, cellphone chargers. Why does a customs union need to get involved with phone chargers? This nicely illustrates two issues. First, this EU phone charger initiative began so long ago that it predates smartphones. So it underlines how slowly the EU moves, and how behind the times it is when it comes to technology. Second, the market has long since resolved any problems by forming around two standards, namely USB for android phones and Lightning for iphones. The EU has wasted its effort and, since it is funded by taxpayers, that means it has wasted taxpayer money. This is just one instance, but is plenty more such wastage being committed in less visible areas. The entity that the UK joined in 1973 was - or so the British people thought - a trade organisation. The EU we voted to leave in 2016 was a political octopus with its regulatory tentacles in every aspect of our lives.

Quoting 

The news I get from family and friends in the UK paints a bleaker picture than you do. Shortage of goods not because of covid supply constraints but because there aren't enough truck drivers.

There certainly aren't enough drivers. Germany is short short 40,000 drivers, there are shortages in other European countries and even in the US. Amazing how this Brexit thing can even affect truckers on the other side of the Atlantic!

In the specific case of the UK, perhaps Brexit has made things worse to some extent, but it's not the underlying cause (I mean, if there are shortages in Europe too, freedom of movement for drivers doesn't really help, does it?). The real cause is haulage firms in the UK, EU and the US paying uncompetitive wages and offering poor conditions for a highly skilled job. There are 600,000 registered heavy goods vehicle licence holders in the UK, but half of these have left the industry, according to the UK's Road Haulage Association. If you can't provide attractive pay and conditions, people will work elsewhere. Simple.

Quoting 

Shortage of nurses in hospitals.

Shortage of nurses? Absolutely, although this is a shortage that has been an issue for decades. Here's a serious paper on the subject from the year 2000, and you can find more from almost any given year.

It's a complex issue, but one of the reasons is that instead of training UK citizens to be nurses, we have for years simply "imported" them from other countries (which is bad news for those countries, which invested in their training but don't benefit from it) both inside and outside Europe. Yes, that's as crazy as it sounds, and symbolic of an attitude in the UK that there are always more workers, and that people are cheap. With Brexit, at least the end to the flow of nurses from within the EU will hopefully force the country to encourage training of nurses from the UK. Common sense, right?

(You'd also think that it would make the UK question the way the National Health Service (NHS) is set up and managed. Nobody in the UK - actually, nobody outside the US - wants a US-style healthcare system, but there are dozens of countries with dramatically lower healthcare costs per capita and better outcomes than the US to which we could look for ideas about improving the NHS, including the Netherlands, France, Singapore, Japan and Australia. Problem is, as soon as you suggest change, everybody starts screaming about being politicians trying to privatise the NHS and being bankrupted by medical bills "like in America!" and the conversation ends there. Very sad.)

Quoting 

Impending split of Scotland from the UK.

Not going to happen. Recent polls suggest a Yes vote of well below 50% (well below No). Given this lack of support in the polls, the fact that the Conservative government has a huge majority, the point that the Scottish government has no legal power to call an independence vote, and the simple fact that Brexit would make independence massively more challenging for the economy of Scotland, there'll be no vote any time soon. Of course, the independence theme is one that the media love, so they keep returning to it.

Quoting 

But with a news media that can't be trusted, and politician's who openly lie all the time, who knows what is true and what isn't.

I am not a conspiracy theorist, because I think most problems can be explained by stupidity, laziness and corruption, rather than secret groups controlling the planet. Still, I agree that the media can't be trusted and this is particularly important with Brexit, because the UK establishment - including most of the media - clearly loved being part of the EU. That might be because it offered an almost unlimited supply of cheap labour for business (factories, farms, retail, hospitality), as well as nannies and maids from Eastern Europe for the comfortably-off, like media executives. For managers wanting to work outside the UK, there were opportunities in Europe in many sectors. It hasn't been such a great deal for blue-collar workers...

People who benefited from EU membership dominate the press, broadcasting, academia, government, and other traditional middle-class professions. This group is, not to put too fine a point on it, butt-hurt that voters didn't do what it wanted. They have fought Brexit tooth and nail, and they're still fighting. So keep that in mind when you read yet another anti-Brexit story on Reuters, or the NYT (which is oddly obsessed with the subject), or the FT. It's going to take decades to get back to a "default UK-centric" rather than a "default EU-centric" view of the world.

Their attitude reminds me of their approach to the euro. When the UK decided not to join the euro, the establishment (the Financial Times being a prime example) predicted that it would lead to the inevitable decline of the UK. Twenty years after the introduction of the euro, it is now widely recognised that staying out was very much the right thing for the UK. The euro has been great for Germany, since it makes its exports more competitive, but a disaster for countries like Italy (because they don't have a lira to devalue any more to maintain competitiveness). A monetary union without a fiscal union just doesn't make sense and the tensions and problems are there for all to see.

More generally, has the euro been good for the EU? There's very little evidence that is the case. In a commendably honest 2015 paper, Reuven Glick and Andy Rose (two influential figures who had previously been cheerleaders for currency union) admitted that attempts to measure the impact of such unions were so sensitive to the exact methodology used that they were effectively worthless. "We conclude that it is currently beyond our ability to estimate the effect of currency unions on aggregate trade with much confidence."

That's not a lot of evidence on which to hang a continent-spanning political project, is it?

The EU and Brexit are being approached in the same way. Those who are pro-EU sell it as something vital to the UK's economic well-being, despite vanishingly scarce evidence that this is the case, certainly for the UK specifically. These people are generally strongly opposed to Brexit, and are selling it as a catastrophe. It's not, clearly. On the other hand, there are people who have a mindless dislike of the EU and are selling Brexit as something that will cure all the UK's problems. It's not, clearly: we have to raise our game considerably, but now our politicians (and the people who vote for them) will no longer be able to blame the EU when things don't go well. It's all on us.

The reality is likely to be that by 2031, ten years after Brexit was implemented, there will have been winners and losers, and life will be little different to what it is today for most people. But we will have repatriated political and regulatory control of our society and economy.

Given that nobody asked my generation, or my parents' generation, for permission to give that control away to the EU in the first place, that seems to me to be a huge step forward, and a significant win for global democracy. It shows that the people of a country can still drive change even when that program is desperately resisted by elite elements of society who benefit from the status quo. The Brits aren't behind the times: we're showing you the way forward.

WW

Great post @westernwind, Thank You.

As somebody who used to live 60 miles up the road from you, but now lives almost 5000 miles away I do not have a first hand perspective of this and it is great hearing well thought out, and well explained perspectives from others like yourself, rather than just what the media regurgitates.

JohnS 

There maybe a lot of sheep farmers going bust: lesson don’t leave a 500 million person market w trillion dollar GDP: https://www.washingtonpost.com/world/boris-johnsons-no-deal-brexit-could-lead-british-lambs-to-slaughter/2019/08/15/274f95d6-b78e-11e9-8e83-4e6687e99814_story.html

It appears in this article that the “Lamb-ageddon” predicted in the above WaPo piece from 2019 has not happened yet and the price of prime Lamb from Wales is at historic highs according to the HCC. An interesting confluence of Brexit and COVID supply/demand flows. Domestic demand seems to have offset some of the lost euro trade. https://businessnewswales.com/livestock-market-prices-reach-historical-highs/

JohnS 

It appears in this article that the “Lamb-ageddon” predicted in the above WaPo piece from 2019 has not happened yet and the price of Welsh Lamb is at historic highs according to the HCC.

Yes, great spot, I saw that a little while back. The Washington Post article is a fine example of how easy it is to forecast a catastrophe, and how easy it is to get it wrong. Like NYT, or the Guardian and FT in the UK, WaPo seems to have decided that Brexit must be bad and the EU must be good. They always accentuate the negative.

There are sheep farms all around me and my nearest farmer is cautiously... I was going to say "optimistic" but that's the wrong word. They're not optimistic, because they dislike change, like most businessmen, but so far things seem to have gone reasonably well.

Also, when tariffs on agricultural imports from the EU are imposed next year that should give local farmers further opportunities. And soon the UK will be able to export lamb to the US again. So it's not all doom and gloom by any means...

Of course, it's equally easy to forecast that everything will be wonderful, and that would be unrealistic. There's going to be more friction, more uncertainty going forward. There are going to be changes. But then again, there would have been changes if we had stayed in the EU.

On a related subject, you should see the way the media and academia are trying to put a negative spin on upward pressure on wages in areas where there are labour shortages caused by the end of free movement with the EU following Brexit. They're trying to treat it like a bad thing. There was a time when the left were supposed to be on the side of workers and would have welcomed better salaries.

This LSE blog, for example, grudgingly admits that recent research "probably shifts the balance of evidence a bit towards the view that migration can sometimes affect pay". No, really, you think?! It's as well to remember that, like the media, academia in 2021 is strongly left-leaning (much more so than thirty or forty years ago) and therefore has a tendency to regard any criticism of immigration with suspicion, and probably self-censors itself on the topic.

Naturally, these news organisations previously insisted that there was no evidence that unrestricted immigration from lower-income countries put pressure on wages. Talking to local people who work in construction or the trades here in the UK who saw what happened after 2004, it was clear that there has been a significant impact.

The media tell us to ignore the evidence of our own eyes, then wonder why we don't trust what they say!

WW