There will be unfortunate irony if Brexit is terrible - but the UK already had real problems
Depending on your viewpoint, Brexit might seem like a brave new dawn, an agonising, slow-motion car crash, or anything in between.
The Joseph Rowntree Foundation (JRF) has just released a new report on the possible impacts of Brexit on poverty.
Its findings are interesting. Not simply because it says child poverty is set to increase (note, it also says overall poverty rates will not be hugely affected by Brexit) with the poorest parts of the UK set to suffer most, or that there will be a greater risk of wages falling in real terms.
If our exit from the European Union comes at great cost it will be a true shame. However, if its central consequence is to exacerbate existing problems, it will also be ironic; Brexit fuelling all the things it was supposed to fix.
Here, "existing problems" does not mean anything sedentary, but difficulties that are getting worse: income growing more slowly than inflation, more and more people unable to afford their own home, a health service stretching and stretching (until it eventually breaks).
Similar estimates have been seen before. Different individuals might consider them confirmation of old information, or Project Fear fake news, depending on their existing opinions.
The JRF paper is measured. The organisation itself takes no view on Brexit. Moreover, it makes no claims on being definitive. Instead, it lays it on thick about how this forecast - which looks at several different types of Brexit specifically - is its (best-possible) analysis.
Nonetheless, on reading their work, a pithy summary of the research could be: after Brexit, the UK will probably be the same, but worse.
At the start of the paper, under the heading, 'What you need to know,' they state:
"The Brexit vote reflected deep-seated anger about economic marginalisation, poverty and lack of opportunities. It is unacceptable that 14 million people are locked out and left behind by poverty as Britain prepares for Brexit. It is highly unlikely that leaving the European Union (EU) will solve these problems."
Not everyone in the UK lives in poverty, of course, it is the unfortunate lot of a significant minority, however concerns about our individual and total wealth is probably the single biggest factor behind our decision to leave, and poverty is the thick end of that wedge.
That might seem like an oversimplification but worries like an ever-more-stretched health service are, to a significant degree, worries about resources. Similarly, while immigration is also something that many people find important, ostensibly one of the drivers behind this is individuals' sense of personal or national economic strife.
Summarising its report, JRF says:
- Child poverty is set to increase across the country, and to affect poorer areas of the UK worst. This rise predates the Brexit vote and is driven by domestic decisions about housing, social security and the labour market. However, many of the worst-hit areas are also highly exposed to changes in trade with the EU and any loss of regional funding.
- There are increasingly strong risks of price rises, falls in real wages, lower employment and lower tax revenues as the UK-EU trading relationship becomes incrementally more distant.
- Poverty rates are not predicted to be greatly affected by Brexit; but this depends on future governments protecting low-income families from the effects of rising inflation by uprating benefits and tax credits to cover rising costs.
in short, things that are already getting worse will probably continue to get worse, but mostly faster.
The organisation asks that:
- Two years on from the vote to leave the EU, it is only right we unlock opportunities so more families are not left behind. The UK Government must deliver more affordable housing, better jobs and an improved social security system to meet the expectations of those who voted to leave the EU. The time and energy being spent on Brexit must not reduce our capacity to deliver a country that works for everyone after Brexit.
For anyone who is interested, this research looks at several different possible Brexits - labelled Norway, Turkey, Ukraine, Canada and No Deal, for their similarity to other nations' current arrangements with the EU, and all measured against the baseline (i.e. not leaving).
It is worth taking a look at their methodology and their findings in more detail, if you are interested.
The short version, however, is that for the poorest fifth of the population, their annual cost-of-living increase for households will range from just over £100 (Norway, when compared with baseline) to nearly £500 (No Deal).
Furthermore, this is based on some assumptions that could be considered kind about the leaving process: "[A] smooth exit from the EU, with no exchange rate shock at the time of leaving."
So, the reality could be worse.
It could also be better, but not by much: the paper also shows a comparative set of estimates based on "[A] ‘zero import tariff’ variant in which import tariffs are reduced to zero and the UK has agreed a comprehensive free trade deal with our largest non-EU trading partners: China and the US."
Under that scenario, the cost-of-living rises for the poorest 20% of households are slightly lower, ranging from around £100 (Norway) to around £400 (Canada and No Deal).
In its conclusion, the JRF report states:
"Fourteen million people are trapped in poverty, and child poverty has risen over several years and is projected to keep increasing for the rest of this parliament. Our research shows that completing Brexit will not solve UK poverty; and remaining in the EU would not undo policies that will lead to higher poverty over the next few years. Rising poverty is primarily a result of domestic policy decisions and of the systems and markets that we have designed. The housing market, the labour market and our social security system lock people into low incomes, creating daily struggles to get by.
"The vote to leave the EU represented widespread anger and dissatisfaction across a number of issues, including low living standards and a lack of opportunities in some parts of the country. Delivering any brand of Brexit is highly unlikely to solve these problems. Our analysis suggests that poverty would be effectively addressed by increasing access to low-cost housing, increasing employment and earnings, and reforming Universal Credit…
"Our analysis suggests that the dissatisfaction that resulted in the Brexit vote reflected anger about economic marginalisation, poverty and lack of opportunities, as well as discomfort with immigration and the EU itself. This is the context in which the effects of Brexit will eventually be judged. This means making sure that everyone in our country has a decent standard of living."
If Brexit is going to be terrible, why did we leave? Misinformation? Xenophobia? Russian meddling designed to weaken the West? Fairytale politics from a ragtag caucus of blind zealots and mendacious chancers?
A cynical assessment could brand each of those as significant factors. The closeness of the June 2016 referendum result can lend weight to all sorts of counterfactual arguments about how, if X or Y had been different, then the result itself would have gone the other way.
However, even if it's all true, that does not explain away the underlying dissatisfaction with how the UK was faring. If nothing else, it is much simpler to snake oil to people who feel their life needs to change.
Too many people feel the nuts and bolts of the lives they are trying to build for themselves and their loved ones - job security, income growth compared with inflation, housing prices specifically, and so on - are increasingly hard to fit together sufficiently well.
These worries are not imaginary. Our local health service is in peril. Gas prices in Northern Ireland are going to rise by 12%. House prices are soaring (not a problem for everyone, admittedly, but very much a problem for some).
Where we've come from had significant problems. That where we are going could be the same, but worse, is a great shame indeed. But Brexit is not at the root of all our problems.
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