United Kingdom: Were Brexit fears overhyped?
The sky did not fall, said Jeremy Warner in The Daily Telegraph. The dreaded Brexit economic shock is here, but it has hit Europe, not the U.K. In the buildup to the June referendum on Britain’s membership in the European Union, scaremongers in the Remain camp warned of apocalyptic consequences should voters choose Leave. But now, nearly three months after Britons opted to exit the bloc, economic data is trickling in and the U.K. looks to be “in much better shape than generally anticipated.” Yes, the pound has suffered a sharp devaluation. But manufacturing output surged in August—sterling’s depreciation made our exports more affordable for buyers in the U.S., China, Europe, and the Middle East—and British consumers spent the summer on a shopping spree. While the British economy sails on “as if nothing has happened,” Europe’s “continues to stagnate.” Both France and Italy showed no growth in this year’s second quarter, and now even the data from Germany is starting to look grim. Voters were right to want out of this failed experiment.
“Those who are pleasantly surprised by Brexit’s consequences should bear in mind that it has not yet happened,” said The Economist. Before the referendum, Prime Minister David Cameron said his government would begin the process of withdrawal immediately in the case of a Leave vote. Instead, he quit and left the job to his successor, Theresa May, who says the complex process of negotiating Britain’s untangling from the bloc won’t start until 2017. “Bookmakers reckon there is a 40 percent chance that Britain will not leave the EU before 2020.” This delay is bad for the U.K.’s long-term economic health, as few companies want to invest here while our trade relationships are still in flux. Already, “growth in business credit has markedly slowed,” and “planned investment is being reined in.” Job growth is now more in low-paid or contract labor, as firms plug gaps without committing to permanent hires. And the pain of the real Brexit, of course, is still to come.
There is a way to pull back from the EU “that doesn’t knacker the British economy; it just involves breaking many of the promises made by Vote Leave,” said Stephen Bush in NewStatesman.com. We could maintain untrammeled access to the single European market—the world’s largest trading bloc—if we agreed to keep visa-free access to the U.K. for European citizens. But many Britons voted Leave precisely because they wanted to stop Polish and Romanian job seekers moving to the U.K. For now, Prime Minister May favors a “best-of-both-worlds deal” that combines single-market access with controls on EU immigration, said Jon Henley in The Guardian. But such an agreement would embolden Euroskeptic parties in Germany, France, Italy, and the Netherlands to seek their own exits, and would fatally weaken the EU. The deal that Britain wants and the deal the EU is willing to accept will likely be two very different things.