Keep qualms and carry on: a decade after Brexit

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0:42Rosie Blau:Hello and welcome to The Intelligence from The Economist. I'm Rosie Bloor. Today we're devoting our show to the moment 10 years ago that changed Britain.

0:57Rosie Blau:The total number of votes cast in favour of Remain was 16 ,141 ,241. The total number of votes cast in favour of Leave was 17 ,410 ,742. This means that the UK has voted to leave the European Union.

1:28Rosie Blau:In the referendum of June 23, 2016, Britons voted for Brexit by 52 % to 48%. Those who campaigned to leave the European Union promised a future free of external interference, ripe with opportunity. Those who wanted Britain to stay part of the EU, including us here at The Economist, warned of disastrous economic damage. Ten years on, how have those predictions fared? And with the impact still very much being felt, and Britain about to get a new Prime Minister, where does the country go from here? Helping me answer those questions is Daniel Franklin, one of our senior editors. Hello, Daniel. Hello, Rosie.

2:12Rosie Blau:Daniel, it's already been a tumultuous week in British politics. Does the fact that we're about to get our seventh prime minister in a decade have anything to do with how destabilising Brexit has been? Well, it's ironic, isn't it, that Britain is in a way becoming more European. Here we are with our seventh prime minister about to come into office and we're sort of becoming Italy. And meanwhile, Italy looks an oasis of stability. but seriously I think it has a lot to do with the specifics of Sir Keir Starmer but it doesn't help that the legacy that Britain has had from 10 years of Brexit has made governing Britain so much harder and so to some extent Brexit hasn't helped and does if you look at it collectively certainly account for the fact that we've had quite so many changes of leadership over the past 10 years.

3:01Rosie Blau:We'll come on to the impact in a minute, but just tell me what you remember about that day 10 years ago and when the votes were then coming in. Well, I was actually out of the country. It wasn't in Britain. I was in France. And it was surreal. I remember very clearly when the results started to come in and it became, I think, quickly clear which way the vote was going. And then I remember that there was a sense of shock. Certainly it was not an outcome I had wanted. and the next day you had to carry on. I was chairing an event and you had to carry on as if nothing had happened except something extraordinary had happened and at least one of my panellists on the panel I was moderating pulled out because there was no corporate line yet on Brexit.

3:45Rosie Blau:I too was out of the country. I was reporting in China at the time and I remember just busily refreshing and refreshing that BBC page, hoping those votes would shift, but of course they didn't. Now The Economist, of course, voted to remain. At the time, we wanted to stay as part of the European Union. Just explain that. I think we saw it and still see it as a great act of self-harm, a monumental folly. It was a very strange moment in British politics, a sort of perfect storm of things that combined to make, both in the political leaderships of the various parties, in the state of the economy, and in the state of Europe, frankly, that meant that this was a very bad moment to have that referendum.

4:27them, the results which we'll talk about were not as immediately dramatic as perhaps many people predicted. But cumulatively, it's been a painful process and one that's led to a lot of inward focus in Britain over a time when we really needed to be coping with what was happening in the real world beyond us.

4:47Rosie Blau:So we'll get to that cumulative effect in a minute. But in the meantime, Jason has been looking at what led up to that seismic vote.

4:57The real starting gun for Brexit was a speech in January of 2013 by then Prime Minister David Cameron. We will give the British people a referendum with a very simple in or out choice. To stay in the European Union on these new terms or to come out altogether. It will be an in-out referendum. The Economist was generally in support of Mr Cameron's decision. We wrote a leader saying that Cameron was right to say, I will hold a referendum on the EU. Yes. Once we realized we needed one, John Peete became our Brexit correspondent. By the end of it all, I was referring to him as our long-suffering Brexit correspondent.

5:41We accepted that there was an argument put indeed by David Cameron, which was this issue has been rumbling along in the Conservative Party for years, and the best way to settle it will be to have a referendum and that will settle the issue for a generation and we'll stop arguing about it. Ha, stop arguing about it. To be clear, even Mr Cameron in that same speech said it was a bad idea. Because I believe something very deeply, that Britain's national interest is best served in a flexible, adaptable and open European Union and that such a European Union is best with Britain in it. At the time, Mr.

6:21Cameron's Conservative Party was part of a coalition government with the Liberal Democrat Party. Their shared grasp on power felt precarious because of pressure from their right. In particular, from one man who groused about Britain's EU membership even as he sat as a member of the European Parliament. The EU budget isn't really the question. It's Britain's place in this union that is the real question. And increasingly, Britain looks like a square peg in a round hole. These days, Nigel Farage leads the Reform Party, once called the Brexit Party. But back then, he headed the UK Independence Party, or UKIP.

6:56He's been banging this drum for some time. We love Europe. We just hate the European Union. It's as simple as that. Fast forward to 2015. The Conservatives won a majority, and in early 2016, Mr Cameron made good on his promise and announced the date of a referendum. I will go to Parliament and propose that the British people decide our future in Europe through an in-out referendum on Thursday the 23rd of June. In-and-out campaigns revved up, and immediately the out camp had an advantage. I think it was still true in 2015-2016 that most observers who knew about this subject thought that probably Remain would just edge it.

7:41I was always quite doubtful. I thought it looked as if it was going the other way.

7:48The Remain camp under the Stronger In campaign had to argue that things should remain the same. And let's together choose for stronger Britain in Europe. But Vote Leave could campaign on change, and they did so with some exceedingly misleading figures. Every week, the United Kingdom sends£350 million

8:10Rosie Blau:pounds of taxpayers' money to the EU. That's the cost of a fully staffed, brand new hospital. So yes, Euroscepticism in a general sense was part of it. Arguments about who was bossing whom around. About the flow of money. But really, a lot of the sentiment was clearly about the flow of people. Take for example a vote-leave poster that Mr. Farage was pictured in front of. A sea of people on the move, almost every one of them brown. Channel 4 heard the dog whistle and took him to task. The only white face has been obscured by text. Many people took that as deeply offensive. And I ask you again, do you want to take this opportunity to say sorry?

8:54Well, the Schengen zone is at breaking point. That's undeniable. The picture was true. It wasn't doctored. The irony in all this is that what then happened actually was that after the Leave vote, immigration actually increased. It didn't fall. The Remain camp, Mr Cameron, most business leaders, us, started out confident, complacent even, that their brand of good sense would win out. Then, ever sensitive to the benefits of a fair political wind, Boris Johnson hopped on the Leave bus. That Sunday afternoon, he came out and said, I'm going to make my announcement. I am going to campaign for leave.

9:32That was quite a big moment in the whole campaign. Mr Johnson had been London's mayor during the 2012 Olympics and brought his charismatic, erratic vibe back into Parliament in 2015 with an eye on higher office. I think we should take the chance now, as a country, to take back control. Take back control of huge sums of money. Given that the margin was only 50 to 48, I think it does suggest that Boris was quite an important factor in the outcome. Leave had momentum, a fiery message, a hard-charging floppy-haired new champion. The opposition Labour Party had Jeremy Corbyn. On a scale of 1 to 10, where 1 is couldn't really care less about the EU and 10 is on jumping on the couch like Tom Cruise on Oprah.

10:22How passionate are you about them saying in the EU? Oh, I'd put myself in the upper half of the five to ten, so we're looking at seven, seven and a half. Ooh, not quite. Maybe seven, seven and a half. You're more than welcome to jump on the couch if you want to. The electorate was fractured, fractious. Conservative against conservative, Labour against, well, itself mostly at the time. Families split, friendships strained. Can you believe what that guy next door thinks? Honestly, it was all anyone seemed to be talking about, certainly the politicians. The voters, though, did have an answer for the Remainers.

10:58The British people have spoken and the answer is, we're out. Leavers rejoiced. Remainers couldn't pick their faces up off the floor. Nigel Farage crowed. Let June the 23rd go down in our history as our Independence Day. All this ferried in a new Prime Minister. I believe Theresa will provide strong and stable leadership. and I wish her well in negotiating the best possible terms for Britain's exit from the European Union. Leave had won, so clearly we were going to have to leave, but nobody knew what that meant. There was no clarity about what would happen next. Theresa May took the reins for years of figuring out what that really meant.

11:42Rosie Blau:Brexit means Brexit. Not much clearer, really. This was the time when I started calling John long-suffering Brexit correspondent. It's also when Britain's prime minister go-round started to speed up. Boris Johnson caught his fair wind and was in charge when Brexit formally, finally, came into effect in 2020. There was no chance of a soft Brexit. It was going to be a hard Brexit, and Boris Johnson got the deal he wanted. A hard Brexit is a good word for what came out. It was hard, has been hard, for Britain and for Britons, and of course, for long-suffering John Peete.

12:20Rosie Blau:To discuss what's happened since then after those moments of apparently taking back control, Daniel and I are joined by Tom Carter, who's our Britain economics correspondent. Hi, Tom, I know you weren't at The Economist at the time. Where were you? It was actually my last day at university when I found out about the result. And although we're about to talk about Brexit's damage, I do owe it a debt of gratitude because it did get me my first job out of university working in the civil service on Brexit preparations. So personally, it was a bit of a windfall. We'll try not to hold that against you.

12:51Rosie Blau:Tom, tell us what the impact on Britain has been from Brexit. When it comes to the economy, at least, the impact has been pretty negative. Exactly how negative is something that academics furiously debate over. Some studies suggest that it has shaven about 8 % of GDP off. Other studies only suggest it's 2.5%. A lot of that depends on the counterfactual that you use. But what we can say is that Britain has grown less quickly than most G7 countries. And if you look beneath these high level numbers, you see all sorts of new frictions and problems emerge as a result of Brexit. When I speak to people and businesses across the country about it, people find it harder to import parts for their businesses.

13:31Exporters have stopped exporting. For a long time, it's stopped people from investing in their businesses. So it's been a whole series of little hurts and cuts.

13:39Rosie Blau:So Tom, it's sounding from what you're saying that the big impact then has been on manufacturing? Yes. And, you know, we should be clear that Brexit has not caused Britain's manufacturing decline. That's been happening for a long time because China basically does it quicker and more cheaply than we do. And also because we have very high energy prices. But Brexit has made it worse. So Britain's share of global goods exports has fallen by 17 % from the referendum to 2025. In the EU, it only declined by 6%. So we have been particularly affected. Now, why is that? Well, the Brexit deal actually didn't put up big tariff barriers with the EU.

14:14But what it did do is create a lot of paperwork and new customs forms and these things called rules of origin. And that basically was very hard for manufacturers, particularly small manufacturers to deal with. So if you're a big manufacturer, you just employ some policy person and they sort it out. But if you're just a one man in his shop, you don't have the time to look for all the regulations. And that meant that we have now 16 ,000 fewer exporters to the EU than we did before the referendum.

14:41Rosie Blau:And what about services, which Britain always likes to think it's very good at? How have they fared? Well, the good news there is that Britain's services continue to go from strength to strength. So exports of services have, in that same time period, risen by 47%. And if you think about Britain, we are butlers to the world. We have lawyers, engineers, architects, all of whom are providing their services to tech tycoons, to sheikhs in the Middle East. And that hasn't changed as a result of Brexit. And in fact, Britain has benefited from the fact that the whole global economy has become more services orientated than it was before.

15:14But that doesn't mean that Brexit's helped. Brexit has actually hindered because in some areas like financial services, like things where you have professional qualifications and you need to be able to show that professional qualification to be able to work in the EU, we have seen less growth than in those sectors like advertising where there are no such barriers. So without Brexit, we could have done even better.

15:34Rosie Blau:And what about financial services? Daniel, you've been looking at this. Financial services is a bit of a mixed picture. I mean, the city is still a force to be reckoned with. And we had a cover story actually not long ago saying the city was getting its mojo back. But as Tom says, I think the problem is that we haven't taken as much advantage of the Brexit potential flexibility that it gives us not being part of the EU regulatory regime, to have more flexible regulations, to have bolder policies. So the strength of the city and financial services have carried us through to some extent, but it has been hindered by the barriers, for example, passporting rules, setting up offices, being able to operate across frontiers that have made us less effective than we would otherwise have been.

16:19And we haven't compensated as much as we might have done by being bolder on the nimble deregulation that would have made business easier. And just to add in on that, that goes beyond financial services, this failure to do all the deregulation that was promised. We were promised that Britain would become a deregulated Singapore on Thames. But all the things that those people who wanted a small state complained about in 2016 to the EU working time redirective, which sort of prevents or makes it harder for people to work above a certain number of hours a week, or the habitats regulation that makes it harder to build, all those things are still in place in the UK because it turns out that it's not the EU that stopped us from having them.

16:53is the fact there are powerful vested interests in the UK that politicians didn't want to cross. Yeah, we're pretty good at red tape ourselves. But we talked about the narrow economic impact, but the opportunity cost of all this, the time it took, the civil service time, the political time, the debate across the country, businesses tied up with this, it's enormously sapping. And it meant that we were talking about what type of Brexit it should be, first of all, and then after that, how do you mitigate the damage of it? And we're still talking about it. We're now facing endless negotiation with the EU.

17:25We'll have a summit next month, for example, for the latest round of this. And there's a cost to all that. It's meant that we haven't been able to lift our eyes as much as we perhaps should have been doing to cope with the world as it is now, the changed world that it is 10 years on from Brexit.

17:40Rosie Blau:We're talking in quite energetic terms here about Brexit, but we're really bored of it, aren't we? We talk about it endlessly. We talk about it in our politics. We talk about it in society. What about that broader malaise that it's brought over Britain, Daniel? Well, there was a time talking about Brexit when it was almost banned. Political parties didn't want to talk about Brexit anymore. And it's just coming back. The anniversary has brought it back even more. And now with the drama over the Labour leadership, it's come to the fore again. But I think there is a continuing question about Britain's place in the world.

18:13How do we, without a historical role of being a bit of a bridge between America and Europe, being within Europe, where do we stand on all that? And that's a bit of a national question still that Brexit has not resolved.

18:26Rosie Blau:And we were hearing just now about those dog whistle posters that Nigel Farage and others put up. How has Britain stood on immigration since Brexit? Well, as we heard from the long-suffering John Peet in the Brexit package, the irony of this is that there was a huge surge in net immigration after Brexit under the leadership of Boris Johnson. And so that's now ebbed. But certainly with people who were hoping to take back control in that sense, it just didn't happen. And that, I think, has contributed to the sense of political disillusionment in Britain that even after Brexit, this, which is a high priority for voters, it hasn't been dealt with satisfactorily.

19:08And just to give a sense of scale to that, in 2023, over a million non-EU people came to this country. That is an order of magnitude more than we had before Brexit. So if you're sitting in one of these cities or towns in the UK and you are voting to take back control of immigration, you really were given a bloody nose by Boris Johnson and his immigration policy. Now, as Daniel says, it has ebbed, but that will have really left a sore taste in the mouth for many Brexit voters.

19:32Rosie Blau:Tom, thank you so much for joining us. Oh, thank you very much for having me.

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21:00Rosie Blau:Daniel, if we accept that Britain probably isn't going to rejoin the EU, then what next? And I'm wondering here, have there been any benefits from Brexit? Well, there have. They may surprise you. We've identified, for example, that puffins have done rather well out of Brexit. That's to do with fishing rules that Britain has been able to introduce independently of the EU regulations, which mean that puffins have been more protected because Danish fishermen haven't been able to catch as many sand eels in British waters as before, and puffins like sand eels. And octopuses have done rather well too.