The Remainers Can’t Crow Yet, But Neither Can The Leavers

It’s roughly three months on from the vote to leave the European Union. To a certain extent the post-vote turmoil has now calmed down, and doubtless there remain bumps on the road ahead, but now that the vote is some way behind us the national debate has shifted.

The question which everyone now attempts to answer with the release of every new piece of economic data is: who was right? Were the leavers right with their bullish confidence and can we expect British 21st century renaissance with a trade deal at every turn? Or were the remainers right? Was project fear an accurate warning that leaving the EU will turn out to be an act of self-harm, hastening Britain’s retreat from the world stage?

Good data is greeted with joy from leavers; bad data with schadenfreude from remainers. In reality it is far too early to tell. Both sides currently have points in their favour but with the current number of variables, this equation is far from solvable as yet.

To give leavers their due, there is much to be optimistic about. Even the most ardent campaigning Europhile can be found admitting their surprise at the global appetite for trade deals with a post-Brexit Britain.

Since the day we voted out we have heard encouraging noises from, among others, Australia, New Zealand, Canada, The United States, China, and South Korea. Not only that but New Zealand and Australia have both promised us the use of their trade negotiators when we begin making these deals.

Factor in the steady trickle of encouraging news about the domestic economy and we have every reason to be confident: this week the PMI recorded a 5-point increase, UK manufacturing posting its highest jump in 25 years. Both the FTSE 100 and the 250 have rebounded from their lows on June 24th and soared to new heights.

Employment has continued to rise as well, as has consumption, and it’s impossible to turn on a news bulletin without hearing a government minister declaring that Britain is “open for business”. There’s even talk of a new low corporation tax rate to try and poach firms like Apple who are worried by the EU’s worrying tax raids on member-states. The message is clear, say the Leavers: Britain is booming, Project Fear was all wrong. The future’s bright; the future’s British.

Except that’s not quite the case. There are still reasons to be more than just a little uneasy about where we could be headed. The nature of those trade deals will be unknown for a long time to come and they are far from guaranteed or always easy to sell to an electorate, as shown by Europe’s experiences and recent shelving of the TTIP.

While optimists can point to investment from some companies, recent news from Japan shows that it is not all coming up roses, with the potential relocation of Japanese firms into the EU if the wrong deal is struck between the EU and the British government. And that brings us to the great uncertainty: the negotiations themselves.

This is what will be key in determining whether Brexit can deliver, and it’s not looking great at the moment. The particular version of Brexit we’re going to get is a controversial question among leavers and currently it looks to be determined by Theresa May’s team which, in accordance with what we’re hearing from the Conservative back benches, looks set to pull the plug on membership of the single market.

Then there is the issue of financial passporting, another uncertainty which has the potential to blow up in the negotiators’ faces. There are vulnerabilities in our position and we don’t yet know how these will be exploited by the negotiators on the other side, some of whom will be looking to give us a rather bad deal in order to deter other member-states from following in our footsteps. Project Fear was ultimately wrong in the short run, that much we can agree on so far, but we cannot know yet how bad it might get, given the number of variables.

And that’s the heart of the matter: Brexit was always about the long run. It was an acceptance of some risk, with the potential for a great dividend if the right Brexit happens. But we can’t say whether it was good or bad yet, partly because it hasn’t happened yet.

Britain remains in the EU and will do for some years to come. Article 50 still hasn’t been triggered yet and we don’t know what the deal will look like when it is. There are many reasons to be optimistic but still all the potential in the world for this process to career off the rails and look like a huge mistake. It will take years, not months, to know whether Brexit was the right or wrong decision. Vote Leave won the war. But it hasn’t won the peace yet.


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