Martin Wolf (“How to get the UK out of its economic hole”, Opinion, November 24) quotes a recent US National Bureau of Economic Research working paper in support of his view that Brexit damaged the economy. Yet he and it miss the whole point of Brexit which was to restore full UK self-government after 40-odd years of EU trade protectionism and over-prescriptive regulation.
This would obviously cause short-term disruption as the NBER authors’ business panel of companies confirms. If you examine UK data behaviour from 2016, evidence of this disruption is predictably found linked to the dates of the Brexit referendum and final EU-departure. The evidence also suggests it has steadily disappeared, as one would expect — see my Journal of Forecasting piece in February 2024; and on the trade issue, National Institute of Economic and Social Research authors in winter 2022.
The use of a variety of comparator country-groups or “doppelgängers” to compare UK performance over the past decade on GDP per capita etc is invalid as a way of linking the UK’s supposed weak performance to Brexit. The comparison is primarily the effect of combining a bizarre group of countries such that its average performance happened to be close to the UK’s before 2016, but most of which have no basic similarity to the UK economically (Estonia and Greece for example). As the UK’s relative behaviour since 2016 could be due to numerous differential factors at work both here and elsewhere, there is simply no identifying link to Brexit.
The UK has performed quite similarly to truly similar economies like France and Germany since Brexit, as noted by Julian Jessop in a recent Substack piece and in his letter to the FT on December 3 (“Analysis that Brexit was a disaster fails the smell test”).
So swapping countries on this method can give you virtually any “Brexit effect” you want, revealing its identification failure. The UK is in fact sui generis and has to be explained by its own acts and shocks.
Its growth slowed sharply after the 2008 financial crisis, well before Brexit. Poor UK policies from both Conservative and now Labour governments have failed to restore it to its previous trend of over 2 per cent.
But these policies can be improved in the long term; that improvement can be boosted by moving more quickly on the path to free trade and pragmatic UK common law regulation, which Brexit has made possible.
Patrick Minford
Professor of Economics, Cardiff Business School, Cardiff University, Wales, UK