Public Opinion and Rejoin Movement

A vote to leave would represent an immediate and profound shock to our economy That shock would push our economy into a recession and lead to an increase in unemployment of around five hundred thousand GDP would be three point six percent smaller. Average real wages would be lower, inflation higher, stterling weaker House prices would be hit and public borrowing would rise compared with a vote to remain. Sounds bad That was the assessment of the UK Treasury in may twenty sixteen, just weeks before Britons voted to leave the EU Now those dire predictions didn't come to pass. The UK economy didn't dive into a recession. but a decade on, there is no question that Brexit has been bad for the British economy So bad that the question of whether it might be reversed is no longer a taboo After years of squabbles, uncertainty and trade barriers What lessons are there both for the UK and for the rest of the world We're navigating this era of economic conflict comes next This is the Economics showro with Samaya Keaines. I'm joined here in London by Anan Menon. Professor of European Politics and Foreign Affairs at King's College, London and director of the Think tank UK in a Changing Europe And and welcome. Thanks for having, Samaya Okay on a scale of one to ten How bad has Brexit been for the UK economy Good, I'm trying to wrap my head around the scale here. I mean The impact has been significant. Probably not as bad as some of the worst estimates are intimating, but certainly very much in line with the long term forecast that we got before the referendum, those short term treasury forecasts you were talking about they're interesting. So I'm not an economist, so I'm going to enjoy this. This just shows Economists don't really understand human beings because what actually happened after the referendum wasn't that we had to have an emergency budget and everything crashed. was There was a European championship. The weather was nice. People had barbecues kept buying beer and the consumers just kept on going aided a bit by the Bank of England and quantitative easing. So the impact was slower. than that short term forecast had implied. But actually, I think if you take the big economic organisations that model the long term impacts of Brexit, none of them have revisited their studies because they're all broadly satisfied they're in the right ballpark Okay, but it was a silly question and I am going to need a number. So let's help you out a bit here. So one is amazing. Brexit was the best thing ever to have happened to the Bit. Okay. seven point five. Okay, All right Thank you. I'm satisfied Okay, so so you think that you know, those longer term assessments werere basically right. The shorted ones, not so much I suppose just diving into the detail and thinking more about those kind of medium to long term assessments, do you think that Economists got anything else wrong when it came to their predictions about the effects of Brexit, perhaps in the way that it played out Yeah, I think, you know, economists have had to adjust their models. I mean, I think some of the impacts took longer than we would have thought to show. I think in some cases, we've been quite surprised by how robust services trade has proven to be ough I think that's down to factors other than Brexit. I mean, in a paradoxical way, COVID was one of the drivers of the relative success of services trade because we learned to do things online So a lot of services are now provided virtually using Zoom or Teams or whatever that would have required travel and visas and all sorts of complications. prior to COVID. so there are things we just didn't anticipate. And of course, the other thing that no one could have anticipated is that the whole task of assessing the impact of Brexit is made hideously complicated by the fact that not only did we have Brexit, but we had COVID, we had the war in Ukraine, we've got what's going on in the Gulf now. Data is really, really noisy and messy. And what about the fact that the way that we actually collect that data when it comes to goods changed That didn't help and the comparability between our data and the EU's data and the fact that you can never really trust data on services because it's so woolly, none of that helps.' so I'm very suspicious of anyone who puts a number onn the impact of Brexit. I think, well, that's a bit of a shot in the dark Well, there are some economists crying there in the corner, so so well done. Well I always assume it's the economist coms people who made them put that number on the front page in the first place and that's good marketing OkayK, but I suppose defending econists I mean at a certain point you need to make a stand. you need to have an assessment of what you think the estimate is. Is your problem that they made the assessment at all or that you they should be presented as ranges. They should be presented as ranges and they should be very carefully hedged Okay, well, let's maybe talk about a specific estimate that I think was presented as a range. There was a paper that suggested that Brexit had cut UK GDP per person by between sixcent and eight percent, which is comparable to the average war How do you think about that one So this is A working paper amongst whose authors was a colleague from Kingingss actually, and it's on the National Bureau of Economic Research Website It's a really interesting piece of work because it does the macro stuff and it also gathers together a whole load of firm level data What do I make of the six percent to eight percent? I'm slightly suspicious because it seems to me that they are assuming roically good performance of the UK economy had we stayed in There are various parts to these models. One is your counterfactual about what would have happened if, and my problem with that paper is that part of it rather than anything else, but they are very, very compelling And I thought the firm level datab bit particularly was compelling on how those firms that trade more with the European Union have been more badly hit in terms of their performance. And I found that evidence actually Really interesting But overall, you're skeptical of the six to eight percent. I mean, you'reing My hunch is that that number is very high. And the reason for that hunch is because I think that there are assumptions about what would have happened I don't really buy into. I don't believe the British economy would have performed as well had we stayed in as they seem to think. Could you elaborate a bit on that though? becausecause I think, you know what happens with these methods is that The economists look at the performance of the UK before Brexit and they try to match that with some kind of basket of countries to construct an alternative world And so before the referendum, in theory, The UK's performance would have been matched by this other kind of average that they pick out. what specifically do you think means that that counterfactor isn't the right one. becausecause extxtrapolating from pre Brexit trends misses out the whole host of economic issues and problems that beset Europe subsequently where you know growth rates across the continent were very, very low. Now I can see a case for saying, I mean a lot of Brexiters will say, Well, look, Brexit hass been fine because our econom is grown Quicker than the German economy, say There are good reasons why our economy has grown faster than the Germans, not least the problems the Germans are having with their export led manufacturing model and what's happening with China and so on and the fact that services have boomed. So I can understand a bit of that. I'm just inherently a little bit suspicious about the scale of it in this paper When thinking about the effects of Brexit, there are various different mechanisms that could have been at play, right? So there's the basic Brexit introduced trade barriers, that made it harder to do commerce, that reduced our economic opportunities. There's the uncertainty effect, right? So the risk that uncertainty over our future relationship with the EU held back investment and that had longer term effects on again our productivity There's one that I think may be underestimated, which is the distraction effect of Brexit. So for several years it was just taking off an extraordinary amount of tension of our most senior political leaders and that was a tension that could have been directed elsewhere. Have I missed any out? and would you under and overweight those factors as I do I mean, I think the distraction one is fascinating. and in a way I'd almost bundle that with the uncertainty one. And one counterfactual that I wrestle with sometimes is for me, one of the sort of defining features about Brexit was To some extent, and for some people, it was a protest against the economic and political status quo that people thought wasn't working for them. And the government at the time, whether it's Theeresa May or Boris Johnson sort of got that. If you remember Theresa May talking about burning injustices, Boris Johnson talking about leveling up There was a recognition that actually Economic inequality was one of the drivers of this dissatisfaction and we should do something about it One of the things I wonder about is if we didn't have the pandemic which was the other thing that led to distraction on a massive scale whether Boris Johnson would have delivered on the leveling up pledge, because I think that would have changed our politics profoundly. I think one of the reasons why our politics is where it is now is because people voted ten years ago for a significant change and they've not seen one So they're trying to protest again And I do wonder whether had we not had COVID all that money that went into furlough. Boris Johnson put a significant amount of money. Would he have borrowed to invest in some of those poorer places, and would he have actually tackled that issue of leveling up? coninced the answer is no That's backward looking. Now let's look forward. Obviously, the UK government is trying publicly to warm up relations with the EU We've had this famous reset, which has been promised several times as far as I can tell What What's actually being discussed here? Is it FT policy not to say the current UK government No, we can say the current UK government It's in flux, but I feel the need to hedge slightly about this. Between now and the publication of this podcast, I'm fair confident that the government will stay in place. soah.. The first thing to say is the government has been locked in by its own redlines So so many other areas of policy actually, but on Brexit the redlines are No customs union, no single market no freom of move So This was a reset that respected the fundamental tenets of Brexit, if you like, o? So it was limited from the start. I mean actually, the other thing the Labour mananifesto says is we're going to tear down barriers to trade. Well, the fact is you can't tear down barriers to trade. and respect those red lines because most of the barriers to trade contained within those red lines in one Where we got to it the summit last year was that the two sides agreed to negotiate. A deal on bits of security, which we'll leave separate for now, because this is mainly about the economics. But on the economic side, there were three things. An agriculture deal, a deal on linking our emissions trading system to that of the European Union and negotiating UK participation in the EU's internal electricity market Talks have been dragging One of the first things we realize is that the EU is not in a hurry And the EU doesn't see this as a priority. It took them months to even come up with negotiating mandates Second thing is that the EU are quite happy with the trade and cooperation agreement, and actually the economic status quo isn't terrible as far as they're concerned. And one of the things they've said during the negotiations is, oh, we're also having a youth mobility deal, which they mentioned at summit, but it's become clear recently unless the EU get that youth mobility deal, they might well not sign off on the economic parts of the package. And the sticking block there Two foold, as far as I understand it. The first is that the UK is quite keen to have a cap on numbers that the EU doesn't like Secondly, the cap on student capap on the numbers of young people who are coming And secondly, the EU wants European students who come to our universities under this scheme to pay domestic fees. and the UK government is saying no A lot of the university sector is in financial trouble as it is. As far as I'm aware is where we are at the moment. we've reached a standoff. One of the ways to know there's been a standoff is that there's meant to be a follow up summit that was initially Penciled in for May, then it was penciled in for the end of June, now I think it' penced in for the middle of July. and that tells you something about how the negotiations are going notot swimming like Um Okay, but stepping back, I suppose you've got these big red lines How big of an issue is it that the UK has gone off and agreed a bunch of trade deals that it would have to give up if it were to say, Ohh actually we do want to be in the customs union There's a kind of embarrassment factor there Is that important or is it really secondary to the big stuff. I think it's surprisingly politically important important, one in the sense that it will be embarrassing diplomatically to have to go to Japanese or the Australians or New Zealanders and say, we know, we've neotiated that trade deal with you. We're going to have to scrap it now because we're going to be bound by the terms of EU trade. I should say in parenthesis that actually one of the impacts of Brexit seems to have been to spur the EU to get a move on and sign some of the trade deals where the negotiations appear to be stalled. So the EU is signing trade deals with a lot of these parties The other thing about the politics of trade deals is Weirdly And I think List Trus was remarkably effective as Trade Secretary doing this She sold trade deals as something really good, regardless of their really, really tiny economic impact. I mean, the government's own impacts for the deals with Australia New Zealand are tiny compared to the impact of leaving the European Union, but there is a sort of public attachment there. So I think in those two senses politically it would be quite difficult And of course, with a customs union, the devil will be in the detail. Firstly There's very little economic benefit to be gained from being in a customs union. The big saving from a customs union would be that it would dispense of rules of origin paperwork because if you've all got the same tariffs, you don't have to worry about rules of origin, o? And those are the rules that basically set out whether a product actually comes from the UK when you're sending it from the UK to the EU. Yeah, But if our tariffs on say China are the same as EU's tariffs on China, then actually that's fine points of a customs union. But the other part of it is whether or not as part of a customs union, we are bound by trade deals the EU negotiates and over which we have no say. And that's potentially problematic I think. So that question of control even intrudes on the customers union and not just on questions of the single If you were to be advising the UK government, I suppose. The current one. the curnt UK government on this reset with the EU What would you recommend that they be going for? What would you think' achievable in terms of strengthening that economic relationship? I would have to say at the moment, I would say to them they should deprioritise this because I think it's going to be very hard to make real progress in economic negotiations. I don't know what sacrifices they're willing to make to unlock youth mobility? If they're not willing to make sacrifices, then I'm not sure they'll get the deal anyway. But I think actually looking at Europe and looking at UK EU relations, the priority for me is to find ways for us to work together well on security. because we face immediate threats to our security The beauty about that is if you're talking defence, you're not really talking about the European Union in any sense. you're talking about NATO, coalitions, the Willing, the Jeff, all sorts of other formations. and I actually think The UK needs to play a longer game here. I think getting closer relations with the European Union, especially with these sort of piecemeal negotiations was take years And I think one of the mistakes the government made is being in too much of a hurry If you'd listen to the Prime Mister at the summit in may twenty twenty five You would have thought the deals were signed. You'd have thought they've got an agricultural deal. You'd have thought you could have swarmed off from Lancaster House and gone through an e gate immediately Be all this stuff takes ages. I mean the eates because of the technology and the bureaucracy, but the deals themselves because it's really hard to negotiate with the European Union. So I would actually I think it would be good politics to place less emphasis on this Because otherwise, you run the risk of coming up empty handed when you've said you're going to have a deal, which is never a good look Okay, great. well We had some economists crying over there in the corner and now we've got some remainers weeping in the corner as well. Okay, well, look politics is happening in the UK How could a change of prrime Minister? this debate. couldould that change your answer Yes and no. and I'll come back to politics in a sec. The no is it doesn't change what the EU is willing to do and how the EU approaches negotiations, okay? And the one thing we have become abundantly aware of over the last year is that the EU isn't going to do us any favors. The EU is going to extract what they can from us. the reason why negotiations over participation in the safe security procurement scheme fell through was because the EU charged us an exorbitant entry fee for it We are paying You know, it' It's remark every time I say this, we are paying half a billion pounds For onene year's membership Erasmus plus, a scheme whereby loads of Europeans come here and very few Brits go there. So the EU will extract everything they can from us and that won't change whoever the Prime Minister is Let me say, I think one of the naiveties of the Stalmmer government was they came in slightly believing that because they weren't the Tories, the EU would be nice to them And that's not how the EU works But on our side look from our politics, yes a change of Prime minister could make a difference. You could have a new prime minister who said let's grab the redlin I'm not sure who that would be in the current Labor Party. But the other thing is the process This is really interesting because if we have a contest for the Labour leadership, That means that the ultimate electorate our Labour partarty members and What you'll get is a process that is almost the mirror image of what happened in twenty nineteen when Boris Johnson became Tory leader. If you think back then, Boris Johnson and Jeremy Hunt were competing for the Tory leadership. Jeremyunt' saying, you can't do no deal Brexit. that That would be dreadful. You' got to do something about it. Boris Johson iss going, let's bloody leave it doesn'tatter if his no deal will go Tory membership was massively Brexit And we're always going to vote for the more Brexity candidate. so So ultimately Johnon The Labour Party are that membership in reverse. Labour Party is basically maybe five, ten percent people who are broadly levy. And the rest of them, I mean the rest of them me feel like are like Alistair Campbell, All right? They're obsessed with Brexit. They just think this is the most horrible thing this ever happened We need to do something about it If you want to appeal to that electorate, one of the easiest ways of doing it is to talk a good game on Europe. And we've seen that already. We saw that with West Streeting It was a very clever intervention. It was a clever intervention because of course Andy Burnham can't talk about Europe in Make afield because it's a very different electorate there. That's the constituencying. Y. West Streeting is the current MP who is the otheresigned as health seecretary. who' the other contender for the next Prime Minister job? Absolutely. And the clever thing about what West said was he didn't say anything at all I think his statement said Brexit was a massive mistake We should have a special relationship with the European Union, who the hell knows what that means? And one day we should rejoin. So actually, he got loads of headlines for being pro European without actually saying anything. That's genius in the context of a Labour Party leadership campaign because what the members should want are pro European vibes in a leadership contest, what we might see is candidates trying to outbid each other on Europe. So you could see a ratchet effect promises made about Europe, which could affect government policy down the line, though again, health warning The easiest promises in politics to break politics you make party members when being elected leader because you never need those party members again. Okay, so watch this space. I'm struck by you talking about the EU and they you know sounding a bit mean. Do you think they're making a strategic mistake I think on security they are. I think the collapse of SaAfF was shameful because we do face real present dangers. And just for listeners who haven't been following that. SaAfe is the Security Action for Europe prorogramme, which is meant to be sort of funding to allow states to work together more closely when it comes to defenceense manufacturing, procurement and so on. And the Europeans need to work together more closely on security. So I thought that was an awful strategic mistake. As for the rest, I mean, it kind of depends on your point of view, doesn't it? For some in the European Union, when they say European strategic autonomy, they mean the EU That is to say, we will build the EU into some autonomous bloc with its own economy, its own security And that's great And it's a restrict view that means that countries like the UK should be pushed down For others, they take a more inclusive view and they say, well, look If we talk about European security, if we're talking about combating Russia and potentially other threats down the line, it would be absurd to exclude the United Kingdom, which, despite it all, is still a leading military power, as a massive diplomatic player, as a seat on the Security Council, I lean towards the latter So therefore I think that the two sides must find ways of working together more closely on security. But I understand why because of EU rules, because of EU politics, that means Memember states will be keen to extract concessions, Getting cooperation on economic matters is going to be really, really difficult How much of the EU's position is to do with uncertainty about where the UK could be in a few years? I mean, Prime Minister Farage isn't exactly an inviting I'm skeptical partly because I think quite a lot of the UK's position is about what the UK has been till now, not what the UK might be in the future. I remember a few years ago We had a candidate to be Pime Minister, who was Lis Truss, who was asked in Hustings whether France was a friend or a foe and she couldn't anser said the jury's there We had a prime minister in Boris Johnson whose own ministers were saying in Parliament, that they might be about to break International law in limited and specific ways, I think was I've got the phrasing wrong, but you know the standoff over Northern Ireland led the British government into a sitation where it was saying quite openly, we might have to break international law here everyone So I think It's not as if the EU have a great deal of faith or trust in us anyway. and I think the EU are all too aware that we might go back to having a government like that. however good relations are with Kistara. so I don't In a sense, you need the specific personage of Nigel Farage to make them suspicious The EU U. They're a professional outfit. They will negotiate with the government of the day But I wouldn't be at all surprised if while negotiating with the government of the day they don't try and find a way of hedging against future attempts at British exit. It might be that we sign an agricultural deal that says there are financial penalties if either of the partners decides to break the terms of this agreement within a certain specified period of time. It's one of the reasons why I think If rejoin ever becomes a thing The EU will be very keen to see you join the euro Because if there's one thing that could make Brexit harder is doing it when you're in a single currency. Okay, well, let's go to break now. but when we come back, I want to talk about politics of that rejoin movement and discuss some new polling on what the British public thinks about all of this We are back from the bak So UK and a changing Europe has contributed or participated in some new polling, some new evidence on what the British public thinks about Brexit ten years on What are the headlines Yep, we've done this polling. IPSOS did it for us. we did it with the P pololicy Institute at Kings. So the headlines are Mainly that there are significant proportions of the UK public who are keen on rejoin polling gets blurrier when you confront the public with Bade offs which the polling doesn't generally do. So there's no good just say, wouldould you like to rejoin? and you'd say would you like to rejoin if Would you like the single market if that means A B and C? And the picture becomes very blurry when you confront the public with those trade offffs. But what is surprising, I think or the number of people Talking about rejoin and the appetite amongst the British public for having another referendum You say that about trade offffs, It's not like those trade offffs were ever specified in the initial referendum. U So I suppose there might be some people who say, well why do we need to specify the trade offs with with another one Well, I suppose because If you're doing a lengthy negotiation, those trade offs will become apparent during that negotiation. So if you imagine we had a negotiation about rejoin At a certain point, the EU would say sign on the dotted line to commit to joining the euro when you've met the convergence criteria. You can't keep that quiet. So in a sense, you ought to always need to prepare public opinion you can't keep it quite as you go through. Leaving was easier in the sense that we genuinely had no idea what it meant when we No one had perspectors and the w Plan But I suppose my point was that you know, when interpreting public opinion or when when trying to predict what would happen If you don't make the public confront those trade offffs before the referendum, then they might not actually influence the result in the same way that the public wasn't really forced to confront the trade offffs inherent in Brexit in the first referendum. You could have a referendum to rejoin and then only after that decide, okay, what does that mean? Except the leave side or the remain outside, as I imagine they would be, would be able to point to trade offs and consequences because we know what membership looks like Okay, we can probably calculate from the formula they use what the British budget contribution would be And we would know that that would be significantly bigger than it was before because we won't get the rebate anymore. So it's a lot easier. and actually because Lef was so intangible, maybe Remain could have done better at pointing to that, but there was nothing at all to point to. It was just ephemeral But I think it'd be different this time aroundound because you do have that clearer idea about what being in the European Union means So looking at the numbers, I was struck by a couple of things. I mean One, you have this shift Right? So so public opinion has soured Rice Yeah But it's really not a slam dunk. That was my other thought, right? There are lots of people who are neutral, don't know There isn't an overwhelming majority to either side Yeah and You know, on the one hand It's risky, right? If you reopen the debate, then maybe people decide, o no, we don't want to go through this again. That was really painful. On the other hand, it could be that some people were impressionable. and actually if politicians were ready to try to lead, then the public might follow them I think that salient question about whether it's an issue for the public, whether it's a priority for the public is really important. When you say that some people might say, Oh Godd not that again. And you hear a lot of that in focus groups. It's like, should we talk about Brexit? No, absolutely not And I think one of the things that we find now is Back in the dog days of Brexit in january twenty nineteen, sort of seventy five percent of the British people thought it was the most important issue facing the United Kingdom. I think that figureures now have two. Andere, I think if you want to run a rejoin campaign, you need to learn a lesson from Nigel Farage because what he did in twenty fifteen and twenty sixteen was he took an issue that no one cared about, which was Europe. No one was thinking about Europe. And he linked it organically to an issue loads of people cared about which was immigration And I think one of the things remain campaigners or rejoin campaigners will need to think about is Can we tie this to an issue that really matters to people? It might be the cost of living, it might be whatever. But I think that is the way to harness enthusiasm and interest in this because simply saying we're going to do Brexit again Can you just describe how attitudes towards immigration have changed though? Because presumably if there was to be another question about rejoin or reversing Brexit There would be many politicians who would be only too eager to accuse those pushing that of trying to raise immigration, which obviously is a concern for many Britons Yeah, absolutely. I mean, our polling shows that actually the public is relatively relaxed about freedom of movement compared to where we were at the time of the referendum, of course Overall attitudes towards immigration has shifted wildly since the referend We had that strange period between twenty sixteen and twenty nineteen when Imigration, I think dropped out of the top ten issues that were of concern to the public and It looked like, you know ublic no longer care. We had two elections, twenty seventeen and twenty nineteen where I can't remember immigration being mentioned Then of course, what you had was the small boats. And you had Rishi Sunak absolutely majoring on the small boats phenomenon so that even those people who weren't aware of the small boats soon became aware of the small boats and The salilience of immigration rose again. and now it's back, I think at the top of the pile as the most important issue facing the public. How you spin that in a referendum? It might be, look This has failed We've left the European Union, it's mushroom, so it's better to be back in and have the old system back. That might be one argument. I've even heard though it makes me a bit ill, some people on the remain side basically saying, God Almighty, wouldn't you rather swap all these sort of Indians for some Europeans? Who knows how that argument will? will go, but you're going to have to deal with the issue of immigration because again it is very, very central to the minds of the public Do you think Britain's ever going to rejoin the EU Frankly, I don't know, but what I'm fairly confident about is we're never going to stop agonizing about our relationship with the European Union. mean, Wh which is ironic because of course, David Cameron called a referendum in the first place because he wanted his party to stop banging on about Europe. What I think we've come to realize is Being outside a continental sized economy on your doorstep makes you far more obsessed with it than being part of the club Because we're always going to be tinkering with our relationship. We're always going to be worrying about what we're doing. We're always going to be wondering whether we could have closer or trade relations with them The European issue is going to be a significant part of our politics for the foreseeable future, whatever our formal situation with regard to them. That' be the footer for many more podcasts. And thank you so much for joining me. Absolute pleasure. Thank you That is all for this week You have been listening to the Economics showh with Samaya Keainnes. If you enjoyed the show, then I would be eternally grateful if you could rate and review us wherever you listen This episode was produced by Mishia Franl Duval, with original music and sound design from Brene Turner. Our executive producerers Manuela Aarraagosa, Flo Phillips is the FT's head ofudio, I'm Sama Kaines. Thanks for listening