Britain is booming – despite Brexit

23 February 2020

6:30 PM

23 February 2020

6:30 PM

After the vote for Brexit, it was often said that our departure from the EU was most likely to harm the very people who voted for it: the industrial workers of the Midlands and North. Didn’t they know that a vote for Brexit would, in itself, lead to 500,000 more job losses? Couldn’t they see that Nissan was bound to wind down its operations in Sunderland and move business to mainland Europe?

Almost four years on, it’s safe to say that most of the economic doom-mongering was nonsense. This week’s figures on jobs and earnings show that, since the referendum, employment is up by one million — and it is rising still. Unemployment in the UK is at its lowest since 1974. Unemployment in Wales is at its lowest since records began. Leaked internal reports from Nissan have revealed that, if the current round of Brexit talks fail, it could move production of Micras from France to Sunderland, aiming to capture a bigger share of the UK market.

This week’s figures also explain why Jeremy Corbyn failed to gain any traction with his idea of an exploited ‘zero hours Britain’ suffering at the bottom of a ‘widening gap between rich and poor’. It simply isn’t true that low-paid workers have fared worse than others. At the lower end of the income scale, earnings are growing faster than average — pushing income inequality towards a 30-year low. Welfare reform has helped move more people into work.

A sharp rise in the National Living Wage, which will soon be one of the highest in the world, has helped this along. The bottom third of full-time employees received an above-average pay rise of 4 per cent. The bottom 5 per cent of part-time workers did even better, with an annual pay increase of 11 per cent. Employment figures, meanwhile, show how wrong William Hague’s Conservatives (and the CBI) were to oppose Tony Blair’s introduction of the minimum wage — and how right the Conservatives have been in recent years to embrace it. Far from the minimum wage destroying jobs, employment is at a record high. Work is paying more — and thanks to a steep rise in the personal tax allowance, it’s a lot more.

A further revealing statistic published by the ONS this week puts paid to another assertion which has been made repeatedly over the past three and a half years: that a vote for Brexit would lead to an exodus of EU nationals. In fact, the number working in Britain over the past 12 months has increased by 36,000 to 2.31 million. The number of non-EU foreign nationals working here has climbed by 49,000 to 1.34 million. There are significantly more Italian, French, Greek and Spanish students studying here than before the referendum.

Such facts tends not to be reported very widely. Even now, when progress is reported, it is often presented as a baffling anomaly — the assumption being that Brexit should have plunged Britain into agony. ‘UK created jobs at pace… despite Brexit,’ said the Irish Times this week. Standard & Poor’s reported that the UK last year saw more private equity deals than any other European country, ‘despite Brexit uncertainty’. Reuters announced that Japanese banks are engaged in a ‘London rehiring spree, despite Brexit’. Forbes magazine surpassed itself, revealing that ‘Despite Brexit, English remains the EU’s most spoken language by far’ — with 44 per cent of Europeans speaking English, far more than the second most popular language (German).

Of course, Brexit was never going to threaten any of these things. Britain’s economic prospects have not been smashed by our leaving the European Union — if anything, it’s a better time to invest in Britain than ever before. It might take a while for those who predicted disaster to understand this. Until they do, we will have to contend with two parallel universes: the real one, in which the economy has been growing, along with employment and wages; and the imagined one, featured in so many of the headlines, in which Britain is still trapped in recession and a low-wage spiral.

Next year, when we will be released from EU rules, there will be more changes. A new immigration system will make it harder for unskilled workers to enter Britain — and we can expect some grumbling. Employers might have to pay more, or do more to train employees. Care homes who say they struggle to attract British staff may have to raise their salaries to something more befitting a job as important as caring for the elderly. Manufacturers who have skimped on investment (making Britain one of the least automated countries in the developed world) might now have to remedy this and equip their staff for higher-skilled work.

For a decade, from 2008, Britain endured the longest wage slump in history. But in the past year or two, a recovery has started — and Tory fortunes have also picked up. The last general election was, of course, an instruction to the government to get
Brexit done and turn the page. But it was also a reminder that voters are likely to reward an administration that can push wages up and taxes down. As the government prepares to deliver the Budget, that’s something worth remembering.<//>

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