Last Wednesday (November 22, 2023), the Tory government in Britain released their fiscal update known…
When the British Office of National Statistics published the January 2021 trade figures in March, the first after Brexit was finalised, they showed a 42 per cent decline in UK exports to the European Union. Exports fell by £5.6 billion and imports fell by 28.8 per cent or £6.6 billion. it was the worst monthly drop since records were first published on a monthly basis in 1997. The Remain crowd went berserk and the ‘I told you so’ chorus was raucous. I wonder where there voice has gone now the February 2021 trade figures show a 46 per cent rise in UK exports to the UK. Boats and trucks are carrying goods to the EU from Britain still. We shouldn’t take the monthly data too seriously, especially as it has been complicated by the transition arrangements and COVID. There will be costs from the change in border arrangements. But the predictions of doom are proving to be wildly inaccurate. I have my flame suit standing by.
YouGov poll latest
Australian politicians regularly cite the – pub test – to guide assessments of what is right and wrong.
As the narrative goes, if something doesn’t “pass the pub test” it must be the object of disbelief.
British readers may be familiar with the original version – the Man on the Clapham ombinbus – which is a concept in British law used to determine whether an action is reasonable or not.
So in that tradition, consider this proposition: If Brexit was so bad and so damaging to the people of Britain and would have generated evidently visible manifestations of badness, then one would expect the government that brought this malaise to the nation would not be surging in the polls and the party that opposed it (Labour) should not be languishing in the same polls.
Especially when the government has been mired in scandals and overseen a disastrous response to the COVID-19 pandemic.
And when the Labour party had installed a new leadership full of talk or flag and patriotism.
The latest YouGov polling on – Voting Intention – produced from surveys over April 13-14, 2021, are shown in this graphic.
Labour has lost 5 points and the Tories have gained 2 points. Have some of their voters moved to the Greens?
YouGov remind us that “Labour’s lowest level since Keir Starmer took over”.
Overall, those who think the Prime Minister is doing “Well” (46 per cent) is now equal to those who disapprove. But back on October 26, 2020, the ratings for Boris Johnson were 34 per cent “Well” and 59 per cent “Badly”.
It is also becoming clear that the Labour leader is failing after undermining Jeremy Corbyn and promising a new start.
Here is the latest ratings from YouGov as at April 12, 2021. Not much ambiguity there.
Now even 44 per cent of Labour votes do not approve of him, whereas on June 8, 2020, the rating was 8 per cent disapproval. The Labour voters who think he is doing “Well” has dropped from 71 per cent on June 8, 2020 to 37 per cent now.
More British voters approve of Boris Johnson’s performance than Starmer (34 per cent to 26 per cent).
And in response to the polling question: “How well or badly do you think the government are doing at handling Britain’s exit from the European Union?” – the gap between “Well” (40 per cent) and “Badly” (47 per cent) has narrowed dramatically.
The gap was 68 per cent (in favour of Badly) in August 2019.
So as more information comes to light and the more ridiculous predictions of doom from the Remain lobby prove to be hot air at best, the perceptions are changing rather substantially towards “Well”.
There are many issues driving these results.
But given the predictions of doom, one would expect that if Brexit was that bad for the citizens, they would not be increasing their voting likelihood for the government that brought that badness to the nation.
The ‘pub test’!
Latest data from ONS
When ONS announced the trade figures for January, there was a cry of ‘we told you so’ from the Remainers.
William Keegan, who has become obsessed with this issue (he should go out more), wrote in his column (January 24, 2021) – Brexit has left us all at sea – even the fishing industry – wrote:
What did Johnson, Gove and co claim? That Brexit would free us from all that Brussels red tape and wasteful bureaucracy. And what has the great deal achieved? The strangulation of cross-Channel and cross-Irish Sea trade, the erection of huge regulatory barriers in the UK, and an increase in costly, very British, bureaucracy.
In his December column (December 13, 2020) – Brexit lies do not bring freedom: the truth alone is sovereign – he wrote:
… the wonders of Brexit are falling apart as the truth of what the Brexiters have wreaked unfolds in front of our eyes.
The ports face chaos; the customary smooth functioning of supply chains is threatened (see the problems Honda is having in its Swindon factory); Tesco and others warn of Brexit-induced price rises; and business investment stalls. Investment is the key to economic growth, but the manifest horrors of Brexit cast a dark shadow.
He is a loud voice and his relentless arguments along these lines have at least been consistent.
Consistently wrong that is.
But his noise is representative of the on-going claims that Brexit is a disaster from Britain.
When the January trade figures came out on March 12, 2021, Keegan’s next column (March 21, 2021) – When will we get Brexit’s Black Wednesday? – likened the results to Black Wednesday.
I wrote about the currency crisis (Black Wednesday) in this blog post – Options for Europe – Part 51 (March 24, 2014) – among others.
And, by the way, Black Wednesday was a line in the sand for Britain that liberated it, once and for all, from the arguments that they should peg their exchange rate to the European currencies.
So not a great analogy anyway.
But Keegan wrote:
The damage is already apparent to businesses and traders that are struggling to cope with the huge impact of the red tape imposed by Britain’s departure on exporters and importers. The recently published overseas trade figures were truly shocking.
Various business lobby groups joined the chorus.
The BBC reported that: “Accountancy firm KPMG pointed to Brexit as the likely culprit for the plunge in trade between the UK and the EU” (Source).
So I wonder what they are all thinking after the release of the National Accounts data (released April 13, 2021) and the Trade data for February 2021 (released April 13, 2021).
The latest GDP data – GDP monthly estimate, UK: February 2021 – shows that:
1. “UK gross domestic product (GDP) is estimated to have grown by 0.4% in February 2021, as government restrictions affecting economic activity remained broadly unchanged.”
2. “Output in the production sector grew by 1.0% in February 2021, as manufacturing grew 1.3% following contraction in January.”
No-one is claiming these figures are good but they are not as bad as previously projected and they look like what happens when a rather strict lockdown is enforced.
On the same day, the ONS released the data – UK trade: February 2021.
We learned that:
1. “Exports of goods to the EU, excluding non-monetary gold and other precious metals, partially rebounded in February 2021, increasing by £3.7 billion (46.6%) after a record fall of £5.7 billion (negative 42.0%) in January.”
2. “The increases in exports to the EU in February 2021 were driven by machinery and transport equipment and chemicals, particularly cars and medicinal and pharmaceutical products” – so not all the car factories have moved across the Channel!
3. “Imports of goods from the EU, excluding non-monetary gold and other precious metals, showed a weaker increase of £1.2 billion (7.3%) in February 2021 after a record fall of £6.7 billion (negative 29.7%) in January.”
4. “Trade in services imports and exports have consistently remained at a lower level since Q2 2020 as services accounts such as travel and transport trade continue to be affected by coronavirus (COVID-19) restrictions” – that is, COVID-19 not Brexit.
So while exports to the EU fell by 42 per cent in January 2021, they rose by 46.6 per cent in February 2021.
Here is a graph for UK exports for the last two years to the EU and to the Non-EU:
The ONS provide more insights into what happened in January 2021:
The falls are also consistent with the unwinding of stocks, after businesses stockpiled in November and December 2020 in preparation for the end of the transition period …
… it is still too soon to determine to what extent the monthly changes in trade for January and February can be directly attributed to the end of the transition period …
… trade patterns are likely to also reflect the impacts of the unwinding of stocks, coronavirus (COVID-19) pandemic restrictions, and lower demand due to the UK and global economic recession. It is too soon to be able to assess to what extent recent trading patterns are short-term or reflect more lasting structural changes.
So just as the January slump did not justify the likes of Keegan and Co attributing the results to Brexit, the February figures do not tell us whether there is massive long-lasting damage to Britain’s trade with EU.
They indicate that perhaps there is no massive damage – but time will tell.
This ONS article helps us get a more balanced view of what has been going on – Did UK firms stockpile items ahead of the Brexit deadline? (published February 1, 2021).
Further information can a;sp be found in this ONS information sheet (March 8, 2021) – Impact of the coronavirus and EU exit on the collection and compilation of UK trade statistics.
It is clear that the pandemic and the changing relations with the EU have impacted on how data is collected and the volatility of it.
It will take a while to settle down.
But the February figures tell us that goods are flowing from Britain to the EU as before. There might be new bureaucratic rigidities but the goods are flowing, which is not the impression the Remainers would like to present.
I thought the latest – Shipping Data – published by the ONS on April 1, 2021, was very interesting.
Some background to this data can be found in this article (March 18, 2019) – Faster indicators of UK economic activity: shipping – which discusses how the ONS has been developing more timely information about the state of the economy, given that traditional national accounts data lags by 3 months.
For the week ended March 28, 2021, there was a rise of 1.1 per cent in the number of daily ship visits (average over the week of 356 compared to 201 on January 2, 2021).
Wolfgang Münchau’s latest Eurointelligence column (April 16, 2021) – So much for the Brexit scare stories – is a sobering assessment of the State of Brexit.
He predicts that both UK exports and imports will recover from their disruption due to the pandemic and the ‘wait-and-see’ approach adopted by both British and European firms to the transition.
What these and other numbers are telling us is that even this bit of the Brexit scare stories will not come true … The future prosperity of the UK will depend to a large extent on the future policies of the UK government – Brexit or no Brexit.
Which is what I essentially wrote in this post – Why the Leave victory is a great outcome (June 27, 2016) – the first blog post after the Referendum.
I considered the Leave vote to be a chance for British Labour to recognise the class struggle that led to the Vote and to reclaim the voice of the workers, which the Right has increasingly been usurping.
Planet Earth to British Labour – do something about it or wither away and make way for a progressive new organised working class movement …
… exit will unambiguously restore British sovereignty and frees it from the austerity-obsessed neo-liberal European Commission and Council. It will no longer be subject to rulings from the European Court of Justice …
… the opportunities by the British polity to depoliticise poor decisions which harm the interests of ordinary people by appealing to the external forces beyond their control have been reduced …
… the choice will not free Britain from neo-liberalism but it does bring the debate back into focus – voter face to face with the British politicians.
There are no guarantees that the decision to leave the European Union will lead to good outcomes, by which I mean help those who have been disenfranchised by the neo-liberal system.
There are scenarios that would lead to the conclusion that exactly the opposite might occur. Indeed, UKIP has every right to claim it ‘won’ and to further pursue its racist plans.
That is, Britain’s future depends on what its politicians do.
The wild doom forecasts from the Remainers were never going to be correct.
They just disguised their ideological positions as economic modelling, and pretended that gave them authority.
Wolfgang Münchau is scathing of this modelling:
The forecasts of unmitigated gloom, however, have been wrong and deceitful. When economists failed to predict the global financial crisis, they did not so out of malice or political bias. But their Brexit forecasts were not an innocent mistake – nor will they be remembered as such.
Food for thought.
I remain of the view that how the British economy turns out post-EU will depend on how far it abandons austerity, restores the public sector, and deals with the ravages of past austerity.
If the Tories return to form, then it is a bleak future.
The Labour Party has to go through more pain and finally expunge its Blairite past before it will be a progressive contributor.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.