The mass media are biased one way or the other about Brexit so they rely on reports from individual businesses about how terrible brexit has been for them. This article provides the data to assess whether being in the EU was healthy for the UK economy.
When examining the health of any business we look at the accounts. Is the business making a profit or are the owners selling the family’s assets to keep it running?
The UK has the profile of a failing business, the business is losing money at around £100 billion a year on its overseas trading and investments:
Notice that the EU has been, and still is, the main source of losses although there was some improvement after 2016.
To pay for this the UK is selling assets, especially property, to overseas buyers and taking out loans. This has led to an overheated property market and the impoverishment of ordinary people (as you would expect if you sell the family’s assets). Your expensive mortgage is heavily influenced by the continuing Current Account deficit and asset sales that it creates.
The problem with the Current Account is not just that it is in serious deficit, it is that it has been in deficit for two decades. The UK has an unrelenting haemorrhage of cash overseas. It happens every year and has a cumulative effect. A large amount of assets have had to be sold to pay for the losses:
Selling off properties and businesses and taking out loans results in yet further losses due to rental, profits, dividends and interest being paid overseas. This results in reduced Primary Income as money is remitted overseas.
Notice that the EU is the main source of Primary Income losses and has been so for almost 20 years. There has been some improvement since 2016.
Most serious countries achieve economic recoveries by building up their own industries and reducing outflows overseas. Japan, China, Malaysia, Taiwan, S. Korea etc. all took this route to recovery. However, the UK and USA are deeply engaged with multinational corporations which oppose any barriers to trade. It is the imbalanced trade in goods that is particularly damaging for the UK:
This is compensated to a degree by a positive balance in service sales:
But overall trade with the EU results in serious losses as can be seen from the balance of trade figures above. Without the EU connection the UK would be a very prosperous country as a result of international trade.
Notice that the problem for the British economy is, and has been the EU. The rest of the world is fine. The EU is the problem.
The Conservative government embarked on a dire scheme after 2016 in which they shifted the UK economy from being a majority domestic economy to an international economy. In 2016 imports+exports were 47% of GDP but by 2022 they had become 68% of GDP. The wages of ordinary British people scarcely changed in this period but, by increasing the massive trade deficit, the government managed to shift yet more production overseas. Every trade agreement signed by the government should have resulted in groans of despair rather than jubilation because only our relationship with the EU needed serious correction, all the rest should have been kept the same. The huge increase in the reliance of the UK economy on International trade was undoubtedly partly to blame for our poor post-COVID recovery. It is the domestic economy that provides stability because if the world sneezes international trade dries up.
The direct payments from the UK to the EU did not cease with Brexit. In fact the highest net payments ever were in 2020 (£14475m). The UK pays out billions on international organisations, the total of these payments is quaintly known as “Secondary Income”. The EU is still taking almost as much as the rest of the world combined:
It was odd that during the referendum there was huge discussion of the secondary income payments (our subscription to the EU) when these were the least of the disasters in our financial relations with the EU.
Over the coming years you will no doubt see lots of “predictions” about how well the UK might do if it rejoins the EU. These are simply lies. Let history be your guide, not biased predictions. The EU was, and still is, a disaster for the UK economy. Only the bribed poodle of a multinational corporation or Trotskyist academic could contest this.
The truly big disaster for the UK was the EU Withdrawal Agreement. The Remainers refused to let any agreement pass that would not substantially continue our economic ties with the EU. This can be seen from the graphs above. The only possible course of action that would have been good for the UK economy would have been a complete withdrawal from most trade agreements with the EU so that it became just another country. The UK should have pushed the EU into embargoing British trade so that it could respond in turn by refusing almost any agreement except WTO terms. The UK should have refused to pay a single pound more to the EU. This would have given our economy the chance to recover from the damage done by EU membership.
Remainers were, and are, in complete denial about the adverse effect of the EU on the UK economy. This is because it does not matter to the British mid-upper classes who see EU funding (paid for by the UK) of their academic departments or the possibility of a cushy job in Brussels as far more important than making racist chavs in Britain comfortable.
What everyone forgets is that the Conservatives were the main supporters of remaining in the EU. The graphs above show that they never really took us out of it.
All of the data above and much more is available from the ONS download: Balance of Payments (xls file).