Imagine a family stuck in a house that constantly floods. The carpets are soaked, the walls damp. It’s always cold, no matter how much they turn up the heating.
The family try everything. They promise to replace the sodden carpets and find new, innovative ways to warm the house. Someone with a laptop wonders if AI might be the answer. But no one ever looks upwards and says: maybe we should just repair the giant hole in the roof.
Britons are that family – and the giant hole in the roof is
Brexit.
Openness is the heart of the matter. Britain flourishes when it is open and trading, and shrivels when it is not. Brexit ignored that core economic reality – a defining fact about these islands – by making the UK less open to trade in goods, taking us out of a single market in which Britain had been in its element, trading freely and without friction to hundreds of millions of consumers. Naturally, and wholly predictably, “Britain has fallen behind peer countries since it lost access”, write Springford and Sissons, with the fall in goods exports
draining more than one percentage point from GDP each year.
The picture is better in services, but even there, for long stretches of the Brexit era, the UK has
lagged behind Germany, France, Spain and Italy. Where once we might have relied on
the money machine of the City to plug the gap left by a declining goods trade, the finance sector has also been hit, losing its once disproportionately large slice of the market. Frankfurt, Dublin, Amsterdam, Madrid, Milan and Paris have all gained, as London has fallen behind. Incredibly, the capital, once the UK productivity engine that helped the rest of the country make ends meet, is now Britain’s worst-performing region in terms of productivity growth. Given Brexit stripped the City of the easy access to EU clients it once enjoyed, that’s hardly a surprise.
