Monday, 18 June 2018
So there isn't a Brexit Dividend? (Or maybe there is...)
The decision to announce a huge bus-driven bung to the NHS has resulted less in a debate as to whether this is a good idea, if it's too much or too little cash, or cynical politics than one about whether there is (or isn't) a Brexit Dividend.
Seems to me there are three ways of looking at this question.
1. We pay over a significant sum to the European Union. For the sake of argument, let's call it £350m per week. When we leave the EU, we won't be paying over this sum of money so it stands to reason that money is available to spend on other priorities like the NHS. The only question that follows from this gives us the second way of looking at this issue.
2. Yes we won't be sending that £350m each week to Brussels but, after Brexit, we won't have all that money to bung at the NHS. In the short term there will be transitional costs, we have to consider what, if anything, replaces the agriculture subsidies, the regional development grants, and the social policy money. We also have a border to staff up, a trade department to run and ongoing costs where we decide to buy into EU programmes like Erasmus. In the short run - maybe five to ten years - there simply won't be a Brexit Dividend. It all makes some sort of sense - unlike the third argument.
3. There'll be no Brexit Dividend because government revenues will be lower as a result of Brexit. Now, leaving aside that this implies an actual decline in GDP rather than a drop in GDP growth, the truth about this argument is that it can't be refuted as it is based on the comparison of an educated guess - 'growth will be X post-Brexit' - and an actual number - 'GDP growth was X'. The problem is that the forecasters, for all their big machines and grand degree, are always wrong. And, during the debate around Brexit, have always been wrong in direction of doom and gloom. This argument can be set out simply as "we said, on very little basis or evidence, that we'd have £110 for every £100 we had back than, we've only £105 so therefore we're worse off." It isn't a good argument.