UK's Post-Brexit Economic Path Questioned as "Road of Delusion"

A recent social media post by James Clark, Director of Communications & External Affairs for the National Farmers' Union, has ignited debate over the United Kingdom's economic trajectory since its departure from the European Union. Clark critically stated, > "The mistake here is to use the pejorative 'Low road/High road'. One of these paths was based on ideology and delusion, the other was based on markets and reality. Unfortunately the UK chose the road of delusion because it felt better." This commentary reflects ongoing discussions about the economic consequences of the UK's strategic choices.

The Office for Budget Responsibility (OBR), the UK's independent fiscal watchdog, has consistently forecast a 4% long-term reduction in the UK's productivity relative to remaining in the EU. This figure, equivalent to approximately £100 billion in today's money, highlights the significant economic impact attributed to Brexit. Chancellor Rachel Reeves recently acknowledged this assessment at a key international economic committee, indicating a shift in official discourse regarding Brexit's long-term effects.

Economists generally agree that leaving the EU's single market and customs union has introduced "non-tariff barriers," such as increased paperwork and regulatory divergence, which have negatively affected UK trade. Studies suggest UK goods exports are considerably lower than they would have been, with some estimates indicating a reduction of up to 30% for certain sectors. While some argue that new trade deals outside the EU could offset these losses, government impact assessments indicate these deals are likely to add only a small fraction to GDP, around 0.2% in the long run.

The "ideology and delusion" versus "markets and reality" framing used by Clark resonates with analyses suggesting that political motivations outweighed economic prudence in certain post-Brexit decisions. Investment in the UK has stagnated since the 2016 referendum, with a reported 10% shortfall compared to a counterfactual scenario without Brexit. This reduction in investment is estimated to have curtailed GDP growth by at least 1.3% by 2022.

The debate continues regarding the extent to which the UK's economic performance can be solely attributed to Brexit, given other global economic factors. However, the consensus among economists points to a negative and substantial impact from the chosen path. The ongoing discussions underscore the complexity of disentangling political aspirations from their tangible economic outcomes.