We can’t afford the Brexit Tax

Rejoining the EU is the biggest economic stimulus available

There’s a popular story about Brexit that runs like this: it may have ushered in a decade of political chaos, but in economic terms it has proved a non-event. After all, GDP and real wages underperformed before 2016 and this pattern has merely continued since. Brexit has only made a difference at the margins, in fact it’s a distraction from our real economic woes.

It’s a seductive narrative, heard on both left and right, because treating Brexit as a neutral event is far more reassuring than confronting its real cost. Has all that effort just left us worse off? The answer, unfortunately, is yes.

One reason Brexit gets downplayed is that it didn’t trigger the immediate recession that the Remain campaign had warned of (though real wages, which were increasing, fell once more as inflation rose). Next to the later shocks of Covid and Ukraine, Brexit looks like a blip – and that’s precisely the problem. In reality, it’s more like a permanent tax that we’ve imposed on ourselves, but one that has brought far more costs than benefits.