Sunday, 25 September 2016

Brexit: Assessing Remain Claims – 3 Months On

It is 3 months since the UK voted to leave the EU.  The Remain campaign – dubbed Project Fear by the Leave campaign – claimed that Brexit would lead to disaster.  To quote from the official campaign website:

“Leaving the EU would devastate UK trade, businesses and economic growth, and put millions of people out of work. There would be less trade, less economic growth, less investment and fewer businesses meaning higher prices and fewer jobs and opportunities for you and your family now and in the future.”

“Economic experts forecast a drop in the value of your home, your pension and the pound.”

Let’s look at their claims in more detail and see how many of them have come true and how many have proven to be false.


Political Events

Claim 1: David Cameron said he will stay on as PM even if we vote leave.

Result: FALSE.  Cameron resigned as PM the day after the vote, saying that his strong pro-remain views made him not the appropriate person to lead through Brexit.  Theresa May, who was also pro-remain was elected as his replacement.

Claim 2: David Cameron said Article 50 will be activated immediately, to start the process of withdrawal.

Result: FALSE.  Article 50 still hasn’t been activated.  Theresa May quickly stated that it would not be activated before the end of 2016.  It is widely expected to be activated in 2017, but bookmakers believe there is a good chance it won’t be activated until 2018 or later.   


Political-Economic Response

Claim 3: George Osborne claimed there will need to be an emergency “Brexit budget” involving higher taxes and reduced spending.

Result: FALSE.  There was no emergency budget after the referendum and Osborne instead proposed tax cuts.  The new chancellor Philip Hammond quickly ruled out the possibility of any emergency budget. 

Claim 4: The BoE will have to increase interest rates.

Result: FALSE.  The BoE reduced interest rates six weeks after the vote.

Claim 5: Farming, scientific and medical research will suffer through losing EU funding.

Result: FALSE.  The chancellor announced on 13th August that subsidies to these industries will continue to be paid, using the money saved by no longer contributing to the EU budget.

Claim 6: Workers’ rights will be in doubt.

Result: FALSE.  There is no appetite to remove any workers’ rights that have come from EU legislation.  Most workers’ rights legislation is already written into UK law; some was written into UK law before the EU rules were created; some UK legislation goes further than EU rules.  A bill presented to parliament on 7th September to guarantee all EU rules on workers’ rights are preserved in UK law after Brexit received no opposition whatsover from any MPs.  Workers rights’ legislation is popular with the UK electorate, which is why there is no threat to them from leaving the EU.


Market Reactions

Claim 7: Foreign companies will decrease invesment in the UK and jobs would be lost.

Result: FALSE.  All the companies that threatened to withdraw or reduce investment, such as AstraZeneca and GSK, have since done a u-turn and confirmed that investment will continue and no jobs will be cut.  Wells Fargo has just spent £300mil on its new European HQ in London.  Tata Steel is now reconsidering its pre-Brexit decision to withdraw from South Wales.  (source)

Claim 8: There will be a reduction in trade.

Result: FALSE.  The rate of business start-ups has increased since the vote, retail sales are rising, and manufacturing output is up. (source)


Economic Performance

Claim 9: The UK will fall into a recession.

Result: FALSE.  GDP continues to be positive.  The UK is growing the fastest of all the major world economies.  Almost no one now believes a recession is likely. (source)

Claim 10: The stock exchange will collapse.

Result: FALSE.  After an initial drop, it took only 6 days for the FTSE100 to recover back to its pre-Brexit level, and is now very close to being at an all-time high.  The FTSE250 took about a month to recover and is now also close to being at an all-time high.  UK stocks are the best performing in Europe.

Claim 11: Unemployment will increase.

Result: FALSE.  Unemployment has continued decreasing.  It fell by 8,600 in July when the ONS predicted it would rise by 9,500. (source)

Claim 12: Wages will fall.

Result: FALSE.  Wages increased by 0.44% in July, continuing the trend from the first half of 2016.

Claim 13: Prices will increase.

Result: FALSE.  The CPI shows price inflation continues to be low, with no change in the trend between Q2 and Q3.

Claim 14: House prices will fall dramatically (18% according to George Osborne).

Result: FALSE.  House prices have fallen, but only very slightly: 1.1% in July and 0.2% in August, and commentators are predicted a strong housing market for the rest of the year.  These are the fifth and sixth single monthly falls in the last 12 months.

Claim 15: The value of the pound will fall.

Result: TRUE.  The pound fell by about 10% against the dollar immediately following the vote and has remained at that level ever since.  For comparison, the pound fell 25% against the dollar between July and November in 2008.

Claim 16: The value of pensions will fall.

Result: FALSE.  Pension pots received a boost from the vote.


International Relations

Claim 17: The EU will erect trade barriers with the UK.

Result: PROBABLY FALSE.  Whether the EU will erect trade barriers with the UK is to be decided during negotiations.  The Leave campaign argued that there would be no benefit to the EU in doing so, and that the EU would be impacted worse than the UK by such barriers.  Since the referendum, many politicians and business leaders in Europe have echoed this view, so it now looks even more likely that free trade between the UK and EU will continue, either via a bilateral free trade agreement or through the UK joining the EFTA.  The German finance minister who said during the referendum campaign that we would be treated the same way as non-European countries after Brexit has now stated that he only said that because George Osborne told him to.

Claim 18: Non-EU countries (like the US) will put us to the “back of the queue” for trade deals.

Result: FALSE.  Non-EU countries have put us to the front of the queue.  26 countries have expressed that they are eager to agree trade deals as soon as possible.  The UK-US trade deal will happen before any EU-US trade deal.  (source)

Claim 19: EU nationals living in the UK, and UK nationals living in the EU, will be at risk of deportation.

Result: PROBABLY FALSE.  EU nationals that have lived in the UK for 5 years or more (80% of the total) are granted an automatic permanent right to remain.  The government has irresponsibly refused to guarantee that the other EU nationals living in the UK will be able to stay after Brexit.  Theresa May has said that she “wants and expects” them to be able to stay, but that it depends entirely on negotiations with the EU: in particular, whether the EU allows UK nationals to continue to stay in the EU.  But UK nationals abroad are highly beneficial economically to EU economies, and collective expulsions are illegal under both international law and the EU’s Charter of Fundamental Rights.  So it seems extremely unlikely that Brexit will force anyone to return home. 

Claim 20: France will expel our immigration officers from Calais.

Result: FALSE.  Just two days after the vote, the French government confirmed there will be no change to arrangements, despite threatening before the referendum that the border camp could be moved from Calais to Dover.


Conclusion

Out of 20 claims analysed, only one has proven correct: the pound has decreased in value.  All the other indicators suggest the UK is experiencing a post-Brexit boom, in stark contrast to the bust predicted by the Remain campaign.

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