Brexit is complicated. There are only three options – no Brexit (Remain), Brexit with a deal and no-deal Brexit – but each option is flawed. Remain has economic attractions, but there is no mandate for it; Brexit with a deal limits the downside and does have a mandate but has little political support.
Only one thing is truly clear: no-deal Brexit or any Hard Brexit is a vulture policy without a mandate.
Let us first consider the mandate. When Britons voted in the referendum, there was one source they could rely on to tell them what Brexit meant: the Leave Campaign. And the leaders of that campaign were consistent: talk of having to leave the single market was ‘project fear’ on steroids. Boris Johnson, the leader of the campaign could not have been clearer. And the other leading lights of Leave also made it clear that, “absolutely nobody is talking about leaving the single market.” Nobody voted for a hard Brexit, because it was not on offer at the time they voted.
A ‘vulture policy’ is one which neither grows the pie nor shares it fairly. It damages the economy and hurts most of the population, but enriches a small minority.
And that is a perfect description of a no-deal Brexit.
There has been a great deal of analysis of the economic impact of Brexit, including by the government itself, and the picture is consistent. Any form of Brexit will do some economic damage, and a no-deal Brexit would do a great deal of damage to the economy. We have not yet recovered from the impact of the Global Financial Crisis in 2017-8; a no-deal Brexit could be worse.
Some sectors will be particularly badly hit: the automotive sector; agriculture, food and drink; consumer goods; and chemicals. In the UK, the automotive sector employs approximately 800,000 people. And it could be devastated. Honda, PSA, Ford, Nissan and Jaguar Land Rover have all indicated that major plants may need to close. And once they are closed, they are unlikely ever to re-open. The industry is in peril. And for every job which is lost in a car plant, a further seven are at risk in the automotive supply chain. The damage in this one sector should be enough to make us reject a no-deal Brexit.
And it won’t be limited to this one sector. The pound is weaker, house prices are falling, retail is struggling, and agriculture is at risk. Over the last month as the probability of no deal has risen, share prices have fallen markedly.
And yet the proponents of no-deal Brexit insist that it offers a great opportunity for increased prosperity. Are they deluding themselves? Actually, no. If you have positioned tens or hundreds of millions offshore, then this type of collapse offers you once-in-a-lifetime buying opportunities. The vast bulk of people will inevitably made poorer, but it is true that for people with the right kinds of funds, a No-deal Brexit offers great opportunities.
As Simon Wren-Lewis points out in his excellent post, the problem runs deeper and wider than a small number of hedge-fund managers donating to the Brexit campaign and Boris Johnson’s campaign, and using their political influence to engineer a hard Brexit from which they will personally benefit. But this is nevertheless an important and often overlooked part of the story.
Commentators sometimes use the metaphor of a reckless bus driver taking the country over the edge of the cliff. This metaphor is inexact: the proponents of a no-deal Brexit are not planning to be on the bus: they are circling in the sky waiting to pick the bones of the victims after the crash. A no-deal Brexit is a vulture policy without a mandate.
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