Each part of the Brexit 2016 debate of the U.K. He sold an economic narrative. Conservatives warned of the great economic costs of leaving the European Union. Leavers promised Brexit dividends: budget savings to spend on the National Health Service, freedom from bureaucracy, EU "frictionless" trade and a series of new trade agreements that would be a boon to exporters.
These days, it's becoming clear from which side I was selling snake oil. And yet, those who sold the brexit-dividend narrative are doubling that bet. Those who badumed that economic reality would force the Brexiters to withdraw from their demands of a tough break with the EU have been wrong.
The evidence of economic pain has been constantly accumulating. Growth has slowed dramatically, wages are stagnating and families are not spending close to what would have been expected if the Brexit referendum had failed two years ago.
A blessing for the economy of the United Kingdom? European companies are cutting back on investments in the United Kingdom. A recent UBS survey of 600 companies suggests that 35 percent of companies plan to reduce their investment in the country after leaving the EU; 41 percent plan to take a large amount of capacity out of the UK altogether and 42 percent plan to change that to the euro area.
The number of projects financed by foreign direct investment has also decreased . At the national level, the decrease is 9 percent, but it is 18 percent in London, 23 percent in Scotland and just over a third in Wales.
Last week, Airbus – which employs 14,000 workers in the United Kingdom and supports another 110,000 jobs through its supply chain: advise the government that it would pack if the government can not reach an agreement for a new trade relationship with the EU, the very "no deal" option that the Prime Minister Theresa May insists that she must preserve for negotiations to be successful Other large employers in the UK issued similar warnings.
Brexiters cling to the ridiculous promise of a weekly weekly gain of 350 million pounds ($ 460 million) that would supposedly come when payments to the EU cease, and which could be used to finance troubled NHS. A week ago, Theresa May promised an extra 20 billion pounds in medical care, but it quickly became clear that this would not come from any savings related to Brexit; It could come from cuts elsewhere, more loans or new taxes, and probably all three.
There are no signs of new free trade agreements to follow or any regulatory review that would convert the United Kingdom into a Singapore-in-the-Thames. There is no possibility for the EU to grant May the full control it wants, as well as access to the EU markets it is requesting, especially for financial services. Brexit is only the fourth most important item that will be discussed at the European summit on Thursday and Friday.
Logic can dictate that, at this point, more people should want to cancel everything. But far from accepting Remain's case in the economy, the latest problems have caused the Brexiters to investigate, point to businesses for stoking fears and accusing the Remainders of being pessimistic and impatient. Chief Leaver Jacob-Rees-Mogg has fired the companies that warn about the costs of the Brexiting with "wanting to absorb the Treasury," the ministry that Foreign Secretary Boris Johnson ridiculed as the "heart of the Resistance."
As decision-making psychologists have found, emotional signals trump objective information for voters. This is evident in attitudes towards immigration, which remain instinctively hostile despite a dramatic fall in European migration and skill shortages in sectors of the economy, including health services and technology sectors.
The remains (about 100,000 shown in London last weekend) point to changes in public opinion and expect their arguments to have more influence. It is true that if you ask people if they thought the vote was right or wrong, now there are more people who say it was wrong. But it is not at all clear how a second vote would be, or even what the question would be. And it seems that the change that is observed has more to do with the fact that those who did not vote for the Brexit now adopt a skeptical stance, that Leavers really changes sides.
Britain is caught in a vicious circle. The factors that created Brexit only get worse with the Brexit, but as the pain increases, it brings more criticism to the establishment, businesses and other perceived enemies. The Brexiters do not blame Brexit. That will make it difficult for any government to make decisions that drive growth and investment.
Major Brexiters such as Rees-Mogg and Johnson are betting that there will be economic gains once the dust has settled. But they understand that for the Brexit voters, those whom they expect to choose the next conservative government, the true dividend is already here. It is an emotional satisfaction.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author of this story:
Therese Raphael in traphael4 @ bloomberg. net
To contact the editor responsible for this story:
Jonathan Landman at [email protected]