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.

For example:

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?

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ian parkinson
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ian parkinson

What nobody has commented on is that a less sucky economy in many european countries recently has shifted the balance between staying at home vs coming to London. Any change in the number of EU people coming to London is ascribed to London being less attractive, but misses that the driver is actually relative attractiveness.

The Monkey
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The Monkey

My phone roaming includes those well known EU countries such as:

*Chile
*Columbia
*Panama
*Australia
*Brazil

etc, etc…

I guess that’s another non fact and will indeed be down to my phone provided to decide what it fancies doing…

Twatting on Timmy
Guest

First, the whole of the referendum and the whole of the issue to which it related was about dividing the country and its neighbours. That was its whole purpose. It makes no sense to appeal for unity in that case: that is the polar opposite of what Brexit was meant to deliver. Can’t May see that? And then to now say that, belatedly, she’s found that there are five objectives for Brexit, when they should have been decided upon before June 23 2016 is absurd: the EU will, of course, be wholly unimpressed. If this is as good as it’s… Read more »

So Much For Subtlety
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So Much For Subtlety

Is that you Ritchie? First, the whole of the referendum and the whole of the issue to which it related was about dividing the country and its neighbours. Actually it was about pretending to let people vote. Cameron did not mean it. But it sort of got out of hand. I do agree it turned out to be about dividing Britain from the rest of the EU though. Not the intent. It makes no sense to appeal for unity in that case: that is the polar opposite of what Brexit was meant to deliver. Can’t May see that? It is… Read more »

PF
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PF

“Is that you Ritchie?”

Nah… It’s Remainiac..:)

PF
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PF

I take it back – just spotted the other posts elsewhere – different politics (on non EU)?

BraveFart
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BraveFart

Certainly some clues from the language that it is Murphy – eg use of absurd and staggering, two of his favourites. No use of candidly though.

PF
Guest
PF

From the posts elsewhere, surely got to be a spoof – as in “a form of Murphy Richards”? It can’t (genuinely) be the Murf, and no one ever comes close to writing in that style, except when they’re yanking him?

PF
Guest
PF

And it’s someone who takes care over their grammar 😉 Looks around at Tim’s regs…

Tim Newman
Guest

Disputes are no arbitrated in London because people there speak English. They’re arbitrated in London because foreigners believe with the English they have a reasonable chance of a fair arbitration. Let’s see if they have similar faith in the French.

Nautical Nick
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Nautical Nick

Hmmm… I’m not following you, Tim. If, say Airbus leave, those jobs will go. Surely that will reduce demand in the British economy too? Certainly the jobs and the demand will re-appear elsewhere, but will be lost to Britain, which is rather the point they are making, isn’t it?

The Monkey
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The Monkey

Nautical Nick – those now un-employed people are just going to give up and not get another job? or start their own business? or train to be a teacher? Other opportunities will arise to use the staff, buildings, etc and around we all go… Kind of like internet shopping is killing retail – the number of people working in Retail falls but numbers of posties and warehouse workers increase…

Bloke in North Dorset
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Bloke in North Dorset

A mate and erstwhile business partner is deputy head of strategy for one of the MNOs and last year he was telling me that roaming charges were on the way out well before the EU stuck it’s nose in. What they were miffed about was all being forced at the same pace and in the same way so they couldn’t manage it as USPs.

Spike
Member

When commenting on Brexit, always assume: (1) The UK will adopt post-Brexit policies that are just as bad or worse as the EC mandates; (2) The EC will not have anything to do with a Free Britain; (3) Desire for separation will overpower desire, in the UK and EC, for one another’s products; and (4) If obstacles remain, businesses and individual tastes will not adapt to thrive in those new constraints. If that doesn’t provide suitable undergirding for the Bremain nonsense, go on to assume that all the other nations of the world will wink out of existence, in spite.

jgh
Guest
jgh

What people keep forgetting – or deliberately obscure – is that in our constitution Parliament cannot bind its successors. If you don’t like what this government does, kick them and and get somebody else in. If Mrs May screws up trade policies, kick her out and get somebody else in to fix them.

PJF
Guest
PJF

“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.”

If aggregate demand is given by
AD = C + I+ G + (XM)
where X is total exports
and M is total imports
then aggregate demand, and therefore the number of jobs, is affected by trade.

NiV
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NiV

Aggregate supply and aggregate demand for labour are just the usual supply and demand for labour averaged over the economy. The demand curve for labour simply defines how much work people want doing (i.e. how many jobs there are) at each price. The supply curve for labour defines how many workers are willing/able to do work at that price. The number employed at equilibrium is where the two lines meet. (So “the number of jobs” demand curve doesn’t tell you anything about “how many people are employed”, where demand equals supply.) This definition only really makes sense for a closed… Read more »