July 29, 2016

#EconomyForum: The UK economy after Brexit

18 minutes

Podcast of Rob Lyons' opening remarks from this week's Institute of Ideas Economy Forum

The vote to leave the European Union has left the world’s

economic experts, politicians and economic officials stunned. Voters

were told that leaving the EU would hit the UK economy hard, with the

only question being over what future arrangements might be made with the

EU. If the UK negotiates membership of the European Economic Area, the

so-called ‘Norway option’, then trade would be largely unaffected. But

such a deal would almost certainly require the UK continuing to allow

free movement of EU citizens into the UK, something that is currently

regarded as politically contentious. The alternatives, from a

Swiss-style bespoke arrangement to a situation with no deal at all, with

trade governed by World Trade Organization rules, seem to offer a

sliding scale from ‘very negative’ to ‘disastrous’.

A minority, particularly the Economists for Brexit group, argue that

leaving the EU will allow the UK to trade freely with the rest of the

world and ditch pointless EU regulations, with the prospect of a revival

in economic growth as a result.

But when it comes to future prosperity, is there too much focus on

the UK’s status within Europe? A week after the vote, the government

reported another damning set of current account statistics, confirming

how much more Britain imports than exports. The government finances

still look weak and there is an ongoing and anguished debate about the

poor productivity of the economy. George Osborne’s declared aim of

‘rebalancing’ the economy, both between North and South, and towards

manufacturing, seem to have come to nought. And the economies of the

Eurozone hardly seem in the best of health, either, with the only

question seemingly where the next crisis will hit. Greece? Italy?

Perhaps even France?

So what does the future hold? What kind of deal should the UK aim to

strike with the EU? While we fret about Europe, should we really be

worrying about problems closer to home?

...more

By academyofideas

3.9

77 ratings