A groupuscule calling themselves “InFacts” has decided to tell us all the actual facts about Brexit and the effect upon the economy. Sadly they seem to be remarkably fact free. Even, to not really understand the subject under discussion, this economy thing.
Two of the biggest British-based manufacturers revealed Brexit jitters this week. Airbus warned it would have to reconsider its position in the UK if it had to stockpile parts to avoid delays from post-Brexit customs controls. The aerospace giant, which employs 15,000 people mostly in north Wales and near Bristol, described this as a “critically bad issue” which would make Airbus “think differently” about its £5 billion UK operations.
The head of PSA, the automotive group that owns Vauxhall, Peugeot and Citroen, came out a day later saying his company “cannot invest in a world of uncertainty” and that decisions need to be made “very soon” about giving more work to its Vauxhall plant in Ellesmere Port, where 1,800 of its 4,500 UK employees are based.
Theresa May’s vague mush of a Brexit is damaging investment and jobs.
The problem here is subtle but absolutely true. Their claim is that trade issues will lead to the number of jobs in the economy changing. That is what is being said – if we don’t get the trade bits of Brexit right then jobs will go.
But it’s an absolutely standard – canonical even – part of economics that trade makes no difference at all to the number of jobs in an economy. It does, and this is the very point of it, make a difference to which jobs are done inside an economy, but no difference at all to the total number of them.
How many jobs is a function of aggregate demand within an economy – and only a function of that aggregate demand. The number of people employed will be the same in an economy with no trade, some, some under preferential terms and under entirely free trade. This isn’t a point to be arguing over, this is one of those things which is, like gravity.
Thus, we’re not going to see a rise – nor a fall – in unemployment as a result of Brexit. That’s just not how trade affects the economy.
We will indeed see a change in which jobs are being done dependent upon trade issues, that’s true. But here the benefit to our economy is access to the imports. The greater our access to the things which J. Foreigner can make cheaper or better than we can both the better off we are and the better the jobs we’ve got to do ourselves. Imports actually drive up pay in domestic jobs – partly because real wages rise as we get access to those cheaper goods and partly as domestic companies gear up to compete.
All of which means that Brexit, allowing us to stop imposing those EU tariffs upon items, will make us better off, raise wages and make our jobs better. While not changing the number of jobs one whit nor iota.
Brexit is also a significant factor in the spate of well-known High Street names going to the wall. Maplin’s boss said the slump in the pound after the Brexit vote was one of the factors which had made it “impossible” for the collapsed electronics retailer to raise capital. Maplin has 200 shops across the country and employs 2,300 people.
Maplin was killed by changes in technology, nothing else. Online shopping means you can get transistors for home electronics more cheaply. And that’s it, nothing else. The only possible effect of Brexit here is that as they couldn’t raise capital less of it was wasted in such a money pit.
Europe’s brightest staying away
Many of Europe’s brightest are being put off enrolling in UK universities, with the Russell Group revealing a 9% fall in EU PhD students starting research courses in 2017-18 compared to the previous year. Concerns include qualifications not being recognised in the rest of Europe and the number of supervisors leaving the UK, reports the Guardian. Brexit is battering our reputation as a research powerhouse.
This doesn’t matter in the slightest. For research is a public good. That’s the very justification for having universities in the first place, that private economic actors won’t provide public goods. But the flip side of this about public goods is that it doesn’t matter who provides them nor where. Research is research, it’s all an addition to human knowledge. That it’s done in Birmingham, Bruges or Beijing just doesn’t matter – because it’s a public good, see?
Financial services jobs continue to seep out of the City. Credit Suisse is moving 250 banking roles out of London as part of the first phase of its Brexit planning, with relocation to Frankfurt and Madrid most likely.
Euroclear, one of the world’s largest securities depositories, is moving its holding company to Brussels so it is less reliant on London. The group has also recently made plans to build a separate securities settlement system for Ireland.
And? See above. Trade just doesn’t change the number of jobs in an economy.
Cities across Europe are trying to poach the UK’s legal services business. Paris, Brussels and Frankfurt are all setting up English-language courts, in a bid to nab lucrative commercial disputes. “While it’s starting fairly small it could have rapid repercussions,” said Conservative MP Bob Neill. Such a gambit would have seemed futile before Brexit.
The commercial court system just about rubs its own face. Fees to use it cover the costs of it being used. And that’s it. It’s not a profitable activity – nor is it to be one. Lawyers getting hired to work in them is nice of course. But English language courts isn’t the point at all. Having French law done in English isn’t going to change anything. It’s having English law being used as the basis of contracts which is important – and that will mean the same lawyers being hired, won’t it?
No more roaming?
Holidaymakers saw their mobile roaming charges scrapped by the EU last summer. Brexit could bring them back. A government spokesperson told Sky News that roaming charges were “subject to any negotiations” with Brussels, although a future partnership is “clearly in the interests of both sides”. Put simply, if May can’t get a good deal, then your holiday texts and data will cost you again.
Seriously? We must remain in a political structure because phone calls? By the way, anyone noticed that there are numerous deals available out there which deal with this problem, allowing cheap international phone calls when roaming? Without a legal requirement?
OK, sure, they’re whining and they’re doing it on Facebook. But this is all rather that fake news which we’re supposed to warn people about, isn’t it?