The Brexit Dividend- What Do We Stand to Gain?
We've left the EU... Now What?
On New Year’s Eve 2020, four and half years after the UK voted to leave and some eight years after David Cameron first promised a referendum, the Transition Period ended and the UK finally detached itself from the EU. Brexiteers have spent much of that time trying to convince the country of the benefits of leaving, but with the withdrawal agreement in place and a trade deal now signed, what, if anything, have we actually gained? What is our Brexit dividend?
During the campaign, much airtime was spent on the issue of the UK’s contribution to the EU’s budget and where else that money could be spent in an EU-less Britain. Vote Leave famously emblazed their bright red battle bus with the words “We send the EU £350 million a week, Let’s fund our NHS instead”. That figure, coming to £18.2 billion a year, and that promise, has been in contention ever since.
In regards to how much money we sent the EU as part of our membership, the actual figure, in 2016, according to the ONS, was just under £14 billion. However, the UK then received money back from the EU to pay for EU programs within the UK, like the common agricultural policy. This pushed our actual net contribution to around £9 billion in 2016, or close to half of what Vote Leave claimed.
Now that we’ve left the EU, whether we can expect that money to end up in the hands of doctors and nurses, as promised, is a debate largely made redundant by the pandemic and the government’s emergency injection of an additional £51.9 billion into the NHS in 2020/21. This has been, notably, not paid for by diverting our EU contributions but rather by huge amounts of government borrowing, suggesting that our EU contributions were never a barrier to increased healthcare spending in the first place.
Another place the UK may gain from Brexit is through controls on immigration. No longer beholden to EU rules on freedom of movement, the government has enacted an Australian – style points based system. EU workers, alongside workers from the rest of the world, must now have 70 ‘points’ to qualify to work in the UK, with these points derived from their English proficiency, qualifications and the pay of their expected British job, amongst other areas. Some economists argue that by restricting the supply of low-skilled labour in this way, wages will be forced to rise, facilitating better living standards for the poorest in Britain.
Furthermore, under the free trade deal, the UK is now free to set its own market regulations and labour laws free from the gavel of the European Court of Justice. Whilst this has generated fears/hopes of a bonfire of red-tape, the EU has retained the option to impose tariffs if they determine that their businesses are at an unfair disadvantage, mitigating the risk of large-scale deregulation. However, this new room to make regulatory changes may be used to great effect by the Chancellor to make Britain a more inviting environment for start-ups particularly in new technology industries like automation. This would create many highly-skilled, high-paying jobs and generate increased tax revenue for the Treasury to invest in public services.
Ultimately, there will be some sort of Brexit dividend, and the government will take back control of certain powers from Brussels, as it has long insisted it would. Whether it will cancel out the economic downsides of leaving the largest free trade area in the world, only time will tell. One thing we know for sure though, our passports will be blue again.
