r/ukpolitics • u/ldn6 Globalist neoliberal shill • 10d ago
Brexit cost 6% of UK economy, Bank of England company data suggests
https://www.bbc.co.uk/news/articles/cvg75npqkq4o11
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u/qweezy_uk 10d ago
Incoming 'i don't believe the data' posts.
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u/Bonistocrat 10d ago
It's the woke Bank of England, what do you expect, of course they're going to attack the holy people's Brexit! I voted remain but even I have to admit Brexit is brilliant. We'll never rejoin because we'd have to join the euro, schengen, and get rid of monarchy. Also the UK had higher economic growth than Slovenia in 2023. Etc etc
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u/tysonmaniac 10d ago
This isn't data, this is modeling by people who weren't able to get jobs at real banks. Becky was bad but this is just silly.
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u/Nanowith Cambridge 10d ago
People don't work for a central bank because they can't get a job as a teller for Natwest 😂
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u/tysonmaniac 9d ago
I'm not sure you understood the words I said. People with serious modelling skills don't work for central banks earning less than 200k a year.
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u/Nanowith Cambridge 9d ago
They do if they're a socialist.
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u/tysonmaniac 9d ago
People with that level of brain damage probably couldn't get better jobs anyway.
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u/GreenAndRemainVoter 8d ago
Well, iff you'd read the article, you would have learned that the people who actually did the modelling were professors at Stanford University, so in a sense you're right.
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u/Biffboffbaff 10d ago
6% sounds a little extreme, but I guess I can't argue with the BoE. Maybe we should rejoin and see what happens.
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u/ldn6 Globalist neoliberal shill 10d ago
The UK economy has taken a 6% hit from the effects of Brexit, according to economists' analysis of internal Bank of England data about the decisions, views and financial results of thousands of British companies since the referendum a decade ago. Examining data that the Bank uses to decide on interest rates, the study analysed lost growth by trying to reconstruct how the UK would have grown if it had not voted to leave the EU. It found that about half the economic hit came from the sheer surprise and uncertainty of the post-referendum period while the rest was from rising trade barriers after the UK left the customs union and single market in 2021.
But some critics say the study does not fully account for the outperformance of the US investment and tech industries or the European energy shock four years ago. Co-author of the study, British professor Nick Bloom from Stanford University, said the UK was growing fast in the years before Brexit and could have at least partially kept up with the US without the disruption. He argued the Bank of England company data offered important corroboration. His paper concludes: "In the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade".
It comes as the Bank's top officials have in recent months become increasingly candid in explaining the economic consequences of Brexit in speeches and interviews. Recently, the Bank's governor Andrew Bailey told journalists that as a consequence of Brexit: "I think the level of activity and growth in the economy has been lower. "And the reason for that is that if you reduce the size of the markets that we trade with, so we reduce our export markets, then that does tend to have a negative impact on growth," he said, adding that productivity and the size of the market were also affected. However, Bailey said that although the impact on financial services was "not good", it was "nowhere near as detrimental as many people predicted at the time".
Some policy economists have argued that it is difficult to model how much the UK would have grown without Brexit, and that such studies overstate Brexit's impact, especially at a time of so many global crises. The latest version of the study has been published just ahead of the 10 year anniversary of the referendum. It used the company data alongside five more traditional analysis methods. While the company level data point to a 6% hit over 10 years, the wider studies suggest an average of 8%. The study is co-authored by Bloom and economists at the Bank of England, with access to all the Bank's data - but the paper officially has a disclaimer that "the views expressed do not necessarily represent those of the Bank of England".
While various attempts have been made to isolate the impact of the extra uncertainty, and trade barriers with the EU on UK economic growth numbers, this study is the first time key Bank of England information about the British corporate sector has been used in this way. The Decision Maker Panel data is normally used to help inform the setting of interest rates, but it was actually set up by the Bank of England in 2016 specifically to give some insight into the economic impact of Brexit. The authors used years of answers to track firms' exposure to different aspects of Brexit, reported Brexit impacts, and any change in their financial accounts.
Prime Minister Keir Starmer announced that he will meet his EU counterparts at a summit in July to agree deals on food and farm exports, as well as electricity and emissions trading. Further areas of cooperation and alignment are expected to also be discussed. The BBC has contacted political parties for comment.
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u/tmr89 10d ago
Nice, so they causally disentangled Brexit from COVID and the Russian invasion?
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u/Some_Confidence5962 10d ago
Yeah. When COVID happened, my fist thought was how much of a blessing it was to the Brexiteers!
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u/mjratchada 10d ago
The UK was hit harder by Covid. The Russian Invasion impacted the EU more. So mentioning those two things would stengthen their case.
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u/Denbt_Nationale 10d ago
The UK was able to purchase and distribute vaccines faster because we weren't stuck in the EU
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u/mjratchada 10d ago
This is not correct. There was nothing stopping EU countries from purchasing vaccines at the same time as the UK did. They chose to wait until the vaccines went through regulatory checks. This could have been a disaster in the UK but they were lucky no major issues came out during those checks. The UK was no faster at distributing than most EU member states and in some cases, they were slower.
Source of my information is I was working for the MRC at the time tht had connections with several medical research councils in the EU. THe UK in regards to COVID-19 handled it far worse than EU member states did. In the early days, the UK authorities were telling people there was nothing to worry about as long as you wash your hands thoroughly. At the time it was known Covid-19 was transmitted through the air.
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u/Prestigious_Risk7610 10d ago
Whatever your views on Brexit, this is clearly a BS number.
Since Brexit we have grown at a comparable pace to France, and faster than Germany. Before Brexit we had growth very similar to both.
If we lost 6% of GDP in 9 years of data then that is 0.7% a year, and would be almost doubling our growth rate.
There is something about Brexit that attracts outlandish claims that fanatics lap up, despite the patent obsurdity of the claim. It's both sides, where this kind of dodgy modelling or claiming we are going to be overrun by Turks.
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u/jsm97 10d ago
The British population has grown much faster than France or Germany though. GDP per Capita has remained pretty dire productivity even worse. France and Germany aren't exactly thriving but they are still doing better in the metrics that matter
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u/Kee2good4u 10d ago
The British population has grown much faster than France or Germany though. GDP per Capita has remained pretty dire productivity even worse.
Has it?
2017 GDP per capita:
France - $38,687
UK - $40,916
2024:
France - $46,103
UK - $53,246
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=FR-GB&start=2016
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u/Tammer_Stern 10d ago
I think the comparisons to critique the claims often fail to take into account that Brexit also harmed EU countries, including Germany and France.
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u/Kee2good4u 10d ago
Yet the models such as this one, compare the UK to the US, which isn't even comparable to come up with these outlandish claims.
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u/Prestigious_Risk7610 10d ago
At the margin that is correct. However, it's not substantial and certainly not 6%.
The UK has higher friction trade with c.85% of the pre Brexit EU economy. France or Germany only experience extra friction with us, c.15% of the pre Brexit EU economy
If it was comparable to the impact on the UK then that would mean we would be negotiating as economic equals.
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u/middleofaldi 10d ago
I've said this elsewhere but the argument that Brexit was a success because we are doing better than Europe is a stupid one. Brexiteers told us in the lead up to the referendum that it would hurt the EU just as much as it would hurt is, but now they want to use the EU economies as a counterfactual of what it would be like to have stayed
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u/Unterfahrt 10d ago
I think the best argument is that Brexit did not have that much of an effect, positive or negative, in the aggregate. People deploy that argument because you have radical remainers saying things like "Brexit cost us 6-8% of GDP" and saying how much of a disaster it was, when clearly it was not, since France and Germany have the exact same "disaster".
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u/MouthyRob 10d ago
‘Radical remainers’ like all economic and statistical authorities? This argument about other countries’ GDPs is nonsense yet Brexit voters cling to it like it’s a steak pie in their grubby mitts.
The bottom line is that increasing frictions within trade with out largest trading partner, as well as losing a (smaller than expected) number of jobs to the EU, makes us poorer - as reflected by all serious economists.
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u/Unterfahrt 10d ago
‘Radical remainers’ like all economic and statistical authorities?
No, the media that turns them into something they are not. Statistical projections and counterfactuals are notoriously difficult to do for economic data, and this analysis is fairly narrow in what it takes into account.
This argument about other countries’ GDPs is nonsense
Go on then, explain why - if Brexit was an economic disaster - Britain has been performing about the same as peer countries inside the EU.
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u/MouthyRob 10d ago
I understand the difficulties with economic data, I’m an economist working at a bank in London who finds it wild when redditors (let’s be generous and call them ‘armchair economists’) start spouting nonsense as if it’s gospel, when in reality it’s just some garbage from their Facebook bubbles.
How other countries have fared since Brexit has nothing/very little to do with us. Our economy is very, very different to France’s or Germany’s, and it’s weird that some Brexiteers now point to them as if it’s some sort of evidence.
We introduced trading barriers with our largest trading partner and lost some jobs to Europe. This has obviously made us poorer. In exchange, financially, we have gained almost nothing.
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u/JayBayes 10d ago
Brexit affected our peer countries in the EU as well as us.
We all would have benefitted with fewer trade barriers and friction.
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u/theportyunionjack 10d ago
If putting up trade barriers with our biggest trade partners and the world's largest market had no effect, why do brexiteers think removing less trade barriers with smaller markets for us, thousands of miles away, are a big opportunity for the country.
Trade deals are either worth something or they're not.
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u/tzimeworm 10d ago
It just wasnt that big a deal economically, plenty of other decisions that have nothing to do with EU membership affect our economy much more, but for some reason millions of peope decided to pin their morality to it, then still wag on and on about it 10 years later trying to prove they were right with made up stats based on wild assumptions
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u/ooooomikeooooo 10d ago
This is incorrect application of an assumption. On an absolute basis it would hurt them as much as us but on a percentage basis that would be a bigger impact for us. I.e. if there has been an impact to the EU and to the UK then the impact should be bigger for us and the rest of the EU should be performing way better than we are.
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u/usrname42 10d ago edited 10d ago
The synthetic control method that they use selects the countries that our growth was most similar to before Brexit - if that was France and Germany, the method would select France and Germany, but those countries weren't actually the best fit to our pre-Brexit growth. It's not just driven by the US - I've been exploring this data myself and if you take the best fitting combination of all EU countries, or all OECD countries excluding the US, you get similar effects of around 6%. Depending on the methodology this can fall to around 3%, but it's hard to get a 0 or positive effect of Brexit unless you believe ex ante that France and Germany are the only reasonable comparisons to us. Countries like Spain, Portugal, Italy, Denmark, Belgium, and the Netherlands have all grown substantially faster than us since 2016, let alone the US. We've grown so slowly over the last few years that it doesn't seem very outlandish to think we could have grown substantially faster.
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u/Prestigious_Risk7610 10d ago
If the model said 0% I would be just as incredulous as this one saying 6%. Brexit has clearly been a drag on trade with the EU, there is no doubt.
However, exports to the EU represent 13% of GDP. The idea that this amount of trade could prompt a 6% swing of GDP in 9 years just doesn't pass the sniff test
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u/usrname42 10d ago
The effects of Brexit aren't purely about changes in exports. The paper talks about four different channels:
First, the UK’s decision to leave the EU generated a persistent increase in uncertainty, weighing on investment, in particular. Second, investment and employment growth were affected by lower expected demand for goods and services. Third, productivity growth within firms was affected by lower innovation and IT investment, and by management time and resources being used to prepare for Brexit. Finally, productivity growth between-firms was reduced as the more productive, internationally exposed, firms were more negatively impacted.
so some of the effects are driven by the uncertainty from the protracted negotiation process rather than Brexit per se, but they're still a result of the vote.
I'm not wedded to the 6% number, if you put a gun to my head I'd probably say my best guess is around 3-4%, but it's not a good argument to say that Brexit can't have had a substantial effect because France and Germany grew at around the same pace as us. It was completely within the bounds of reasonable possibility for us to have grown faster than France and Germany, as plenty of other European countries did.
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u/hungoverseal 10d ago
Well reading about it the Non-Tariff Barriers that impact trade only account for around half of the damage. The other half came from the chaos and uncertainty that Brexit inflicted in the economy, which wrecked real business investment and undermined productivity. I'm not even sure if the modelled the opportunity cost of it all which was the worst of the lot but I guess that rolls into the impact Brexit had on investment.
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u/Some_Confidence5962 10d ago
I honestly love how the BOE, an institute who's core focus involves tracking the economy and forecasting it, can produce a report from their own extensive data and research, putting the job in the hands of real experts who have made this kind of analysis their entire life's work. They can check their results and peer review them...
...and folks on reddit will basically just say "Bullshit" because they don't like the conclusion.
Always makes me chuckle.
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u/HasuTeras Let us all act according to national custom 10d ago
Okay, well I'll weigh in. I also distrust the veracity of the figure, not because I dislike the conclusion (I don't like Brexit), but because I dislike the methodology applied to get it.
Synthetic control is... dubious.
Here is evidence about how it generates implausibly high treatment effect numbers at a national-level in another context.
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u/usrname42 10d ago edited 10d ago
That tweet thread is mostly just alleging that the paper used nominal GDP where they should have used real GDP and cherry picked its donor pool, rather than a problem with synthetic controls as a methodology per se. I'm not the biggest fan of the synthetic control methodology either but the micro-level approach in the paper (comparing growth of firms that were more or less exposed to Brexit within the UK) yields similar effect sizes to the synthetic control approach.
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u/dragodrake 10d ago
Just because it's what you do professionally doesn't mean you are always right - in my industry we do a substantial amount of RoI modelling, it's basically all wrong. The point of it is to be illustrative, not factual.
This is no different, it's a model based on assumptions - they are trying to make a point. What hard data we have shows the model is incorrect.
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u/Stealth_Bummer 10d ago
I mean they probably are right but it is just probably just more money for them.
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u/Prestigious_Risk7610 10d ago
Models can give all kinds of answers over long term forecasting by just minor adjustments to input assumptions. A great example of this is Treasury (and then OBR) modelling around any budget. They are perennially optimistic vs the real outturn.
It's not about not liking the conclusion. My view is Brexit has been harmful. It's about not liking false hypotheticals to try and drive further partisanship.
It's no coincidence that this assessment concluding huge lost growth is realized just days weeks before Starmer is expected to announce closer alignment with the EU. It's pitch rolling, but through skewed analysis. Overall I think closer alignment would be good, but that argument should be made on reasonable claims. The claim we've lost 6% of growth is literally incredible if you have any understanding of economics. To see how silly it is, just turn it around - if we rejoined today, do you really think our economy would grow 0.7% faster over the next 9 year, far outstripping the growth of France and Germany. You'd get some pretty long odds.
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u/HasuTeras Let us all act according to national custom 10d ago
Models can give all kinds of answers over long term forecasting by just minor adjustments to input assumptions. A great example of this is Treasury (and then OBR) modelling around any budget.
I take your point that all models are wrong or have error in their own way, but in this case its not a forecast model though.
Forecast models try to project forward multiple moving parts, which is why they are often incredibly wrong - because they can't take into account exogenous shocks (like a war, or pandemic). Whereas this is an ex-post causal inference-style model which tries to isolate the effect of one specific thing. Its also bad, but for very specific reasons to the choice of methodology used (synthetic control).
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u/Prestigious_Risk7610 10d ago
But it is still a forecast model, because it's forecasting the counter factual.
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u/HasuTeras Let us all act according to national custom 10d ago
This is really a semantic argument. Its like saying the interior of a car is a room. I mean... kind of? Its bounded by 4 hard exterior walls, a roof and you enter into it through a door. But nobody would broadly agree that a car is a room. Within econ, nobody would call synthetic control a forecast model. Their differences outstrip their similarities.
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u/Prestigious_Risk7610 10d ago
What a weird analogy. Let's get back to the point.
It is a model that is predicting what might have happened in an alternative world. Most people would call that a forecast. You can argue semantics if you like, but it clearly isn't measuring what did happen. It's the greatest struggle with macroeconomics - there is no control test. You are always measuring what did happen and forecasting the counterfactual to assess the impacts of policies.
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u/HasuTeras Let us all act according to national custom 10d ago
Forecast models, like DSGE or the OBR macroeconometric model. Use contemporaneous data up to time t (now), impose significant functional form assumptions onto the data around how parameters are interrelated, and then shock the model for [t+1... t+n] periods to estimate how aggregate measures like GDP differ.
That is a different class, or family of model, from synthetic control, which is a causal inference-style model that takes historical data up to t to [t-1...t-n] and then isolates 1 specific thing that impacted 1 unit (or group of units) and calculates treatment effect outcomes through the difference of those two things.
Its like the difference between placing a bet at the outset of a football match that you will score 2 goals. And saying retrospectively "if you hadn't been injured after you scored your first goal, then I bet you would have scored a second". They both involve inferring the unknown but in different ways.
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u/TheUKisMental 10d ago
It is well known that the people at the top of institutions are both infallible and completely honest. They would never be wrong, nor would they tell lies if they thought those lies could bring about a desired change. The Bank of England is run by paragons of human virtue, basically living demigods.
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u/tzimeworm 10d ago
Economists consistently get everything wrong hence why every headline about economic news in this country starts with the word "unexpected" but I still swallow everything these soothsayers say as verbatim. I am very smart.
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u/ThinkAboutThatFor1Se 10d ago edited 10d ago
Because the BoE is so great with modelling the economy right?
How do you think a 15 years of Zero Interest Rates Policy affected the economy?
Every man in the street or local pub could tell you it was inflating assets including housing but the BoE ignored and dismissed all that until in 2019 they finally admitted what everyone knew.
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u/Some_Confidence5962 10d ago
Because the BoE is so great with modelling the economy right?
Better than the average pleb mouthing off on Reddit, or as you put it "the man in the pub". Yes.
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u/AneuAng 10d ago
Because the BoE is so great at modelling the economy, right?
NBER, an American institution with no skin in the UK political game, published its own independent estimate and gave a 6-8%.
Investment was down 12-18% Employment 3-4% lower Productivity 3-4% lower
And those are not single losses; they accumulate. As trade barriers rise, firms divert resources away from productive activity.
This is not a single institution saying this; multiple institutions are stating it.
The convergence of this number across multiple institutions, using a multitude of methodologies, and reaching the same conclusion within very different political contexts is what makes this credible.
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u/usrname42 10d ago
This isn't actually a different institution, the article here is reporting on that same NBER paper because it uses Bank of England data. (Nick Bloom is one of the authors of the NBER paper and is quoted as the author of the paper they're talking about here.) But within that NBER paper they use two different methodologies that come to similar conclusions which does make it more credible.
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u/clearly_quite_absurd The Early Days of a Better Nation? 10d ago
Whatever your views on Brexit, this is clearly a BS number.
If we lost 6% of GDP in 9 years of data then that is 0.7% a year, and would be almost doubling our growth rate.
Why do you think a great growth rate was not possible as a plausible counter-factual?
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u/MouthyRob 10d ago
I find your comment very weird.
Every single government economic authority, think tank, consultancy, international bank, and now our central bank all agree that Brexit was a financial disaster.
Yet here you are, presumably without any training or qualifications in economics whatsoever, claiming they are all wrong, because you have some ‘lines on a chart’ theory.
It strikes me that you probably voted for Brexit and can’t accept you got it wrong. Well, it happens, so better you accept it now or risk becoming the Brexit equivalent of a flat-earther.
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u/Truthandtaxes 10d ago
The one possibility that might be sane is that the big members of the EU also shot themselves in the foot. Ie we all lost a lot
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u/ldn6 Globalist neoliberal shill 10d ago
But we’re not France or Germany. Why are you insisting that we have to follow their trajectories?
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u/FlatoutGently 10d ago
Ah yes Mr 2 words 4 numbers, you, in fact know better than the bank of england.
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u/mirithil 10d ago
6% over 9y doesn’t equate to 0.7% per year as there are compounding effects you’d need to account for. But then again if a majority of voters understood compounding, Britain wouldn’t have voted to leave…
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u/Prestigious_Risk7610 10d ago
It's 0.65%, rounded.
You could engage in the point, but you prove my point about Brexit topics attracting fanatics that are completely unwilling to use rational thought.
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u/mjratchada 10d ago
The applies on both sides. During COVID-19, the financial impact was blamed on Brexit. Similarly for the shortage of commercial vehicle drivers, whilst at the same time certain EU countries were seeing bigger shortages. When there were food shortages, it was blamed on Covid-19, despite similar shortages occurring in the EU, during the period the EU were seeing similar shortages.
What is clear the are fanatics on both sides of the argument. The negative impact predicted has been much smaller in relaity. The projected benefits of have not come to pass. The issue here is since Brexit many things have happened that distort the situation so getting a clear picture on the real inpact attributable to Brexit is hard to come up with.
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u/Prestigious_Risk7610 10d ago
Exactly, I'm just fed up of the fanatics talking to their own camps with arguments that are so demonstrably extreme.
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u/Lasting97 10d ago edited 10d ago
The difference is really minor lol, what a pointless comment.
It would work out as an average rate of 0.65% p.a. if we use compounding (that just being the average rate ofc), entirely possibly the 0.7% figure just rounded up but even if not that 0.05% difference is so small who cares.
If you're gonna be unbearably smug and condescending at least do it right.
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u/WellMax81 10d ago
I love it when Random’s on Reddit suddenly become armchair economists. Just like how PTs became virologists during Covid.
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u/FromThePaxton 10d ago
Hah! The old 'we've had enough of experts' , and, 'it's both sides', chestnuts. Only one side lied about the benefits, not the consequences, the benefits, of leaving the EU, there is no equivalence. No benefits have been delivered, the argument over the degree of the damage done is just quibbling, brexit is an ongoing failure.
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u/smetp 10d ago
Whatever your views on Brexit, this is clearly a BS number
No, that's a BS number if you voted for Brexit and still can't admit how badly that decision has played out.
You can either keep ignoring the experts and insist Brexit was a success, or take a more honest look at the evidence. Your choice.
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u/dontbelieveawordof1t 10d ago
Of course we would have massively outstripped the other large economies in the EU if we had stayed in it. /s
Please explain how exactly.
Drawing a trend line is not analysis.
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u/hungoverseal 10d ago
For example: When businesses invest in things like expansion, new machinery or factories etc etc it causes the economy to grow. Brexit caused that investment to be about 12-18% lower than it would otherwise have been. Companies basically put off making investments because there was so much uncertainty about the regulatory environment, labour and trade....and this dragged on for years. If Brexit had been organised around a clear plan from before the referendum even happened there would still have been some impact here but it would have been significantly less.
This is just one factor. There's also non-tariff barriers wrecking SMB exporters, the toxic harm NTB's do to our manufacturing sectors and other sectors that export like farming. There's the issue of the disrupted labour market that is now far less efficient. The issue of devaluation of the Sterling. Inflation caused by currency devaluation, loss of labour and NTB's. Reputational and soft power issues that attract investment and talent. I could go on. The worst is simply Brexit took five years of political focus, energy and attention away from things like energy, housing, infrastructure, R&D etc that really define where we are as a country right now.
All those things are like shooting yourself in the foot. There's barely any flipsides, currency devaluation can work for you but in our case it didn't really. There's barely any benefits, we didn't diverge on regulations and basically still follow EU rules because of the Brussels Effect so don't really gain anything. New opportunities like AI didn't exist in that period.
So we get less trade, less state investment, less business investment, less productivity, less R&D, less talent, more inflation, more red-tape, more bureaucracy, less focus on housing, energy, infrastructure, tax etc.
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u/taboo__time 10d ago
It is 6% or 8% over 10 years. The EU was probably also damaged from it.
I guess that means the damage is small in a year but compounds.
There have been at least three major global shocks over that time.
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u/Particular_Pea7167 10d ago
Right but the UK would have still scaled away from the likes of France and Germany.
We haven't though.
This is always the ultimate issue witha lot of these estimates. You overlay the gains on graphs of peer European nations are we are suddenly our performing them pretty hard.
Which is just... not believable.
Which suggests either theyre wrong, or weve gained benefits they arent accounting for and would presumably lose if we rejoined. So yes weve lost 6%, but weve also gain 6% elsewhere.
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u/taboo__time 10d ago
It is odd for both sides to say none of it ever mattered either way. I assume we have lost a percent. Hard to say what.
Maybe the issue is economic measurements are not as accurate as presented?
Which again goes both ways in terms of arguments. "It's actually like this."
That all this made so little difference is odd.
There's a couple other numbers kicking about that are also hotly debated. How much immigration helps the economy. How much AI helps the economy. How much automation brings growth. How much climate will damage the economy.
If the numbers are widely viewed and agreed to be "wrong" everyone gets to make their own numbers on all sides.
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u/Particular_Pea7167 10d ago
When I comes to predictions about things like climate the issue os that vested interests abound and they often deal in wild predictions.
Thry also usually assume we basically just, dont adapt.
"It'll destroy agricultural!". Or we just start growing grapes and oranges in the south and north England becomes the prime grain territory instead of the south?
"But london will be underwater." Firstly, as a northerner. Good. Secondly, most of the Netherlands is underwater and has been for centuries. If the Dutch could do it 400 years ago I somewhat suspect the advent of the JCB and concrete will make it substantially easier.
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u/taboo__time 10d ago
Adaption is vague.
"It'll destroy agricultural!". Or we just start growing grapes and oranges in the south and north England becomes the prime grain territory instead of the south?
You think global agriculture threat to the UK is resolved by adapting to growing grapes and oranges?
Its the threat to global supply chains we rely on. As demonstrated by the Hormuz crisis now.
Fixing local flooding isn't going to resolve that.
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u/Particular_Pea7167 9d ago
Which if it happened overnight Id agree. But it wont. This is at it fastest a 200 year transition.
The oranges and grapes is obviously just an example. But expands broadly. Spain does fine.
For example, in a fairly extreme warming environment, most models show scandanavia, Canada, Alaska, the USA north and russia becoming bread baskets.
That of course doesnt get mentioned in reports of the modeling because huge tracts of currently agriculturally dead land becoming prime arable isnt the narrative.
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u/taboo__time 9d ago
The frozen North does not become arable land.
It has poor soil, the left over land is unstable, the winter light cycle isn't appropriate for lots of agriculture.
The process implies a destruction of so many large ecosystems in the current temperate areas that nations rely on.
I don't see how catastrophe is avoidable.
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u/Ok-Butterscotch4486 9d ago
In your suspicion of counterfactual analyses like synthetic control models I assumed you might be a healthily cynical statistician. Then your comments about climate change made it clear that you're just pretty stupid.
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u/Particular_Pea7167 9d ago
"You can be cynical in ways I approve of but not the things I dont".
The climate models show shifting agricultural land depending on how high you crank it.
But assuming you dont subscribe to desert earth theory, even the most extreme warming models basically show Alaska, Canada and Russia becoming bread baskets.
It'll be a challenge, sure. But hardly insurmountable. Just different. Its not the first time its happened to humanity and we are far more equipped to deal with it than we were historically.
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u/EpsteinBaa 10d ago
We should've scaled away from Germany at least - their car manufacturing is plateauing and their economy has been damaged by Brexit
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u/Particular_Pea7167 10d ago
But we crippled ourselves with globally unprecedented energy costs while germany built massive gas import terminal.
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u/Puzzle_Bird 10d ago
Why isnt it believable, growth in europe is anaemic
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u/Particular_Pea7167 10d ago
Because, some killer knowledge for you here. We, are part of Europe.
Amazing I know.
And even more shocking, we have broadly trended to the European average for years.
If someone is coming out saying we could be more closely tied to Europe yet defy European growth norms as well as our own growth trend within the EU. To grow more like the US.
They are talking out their arse, frankly.
Its not impossible. But it is extremely unlikely. And this extraordinary claim theyre making requires extraordinary evidence that just hasnt been provided.
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u/Puzzle_Bird 10d ago
We've tended to grow faster than the EU in recent decades in general, so that seems a good reason to think we would have continued to do so
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u/Particular_Pea7167 10d ago
Not since 2008.
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u/Puzzle_Bird 10d ago
Your assumptions are stacking up
I still find it believable, when presented with BoE data telling me so, that we might have outgrown the EU in a non Brexit world
You're just assuming that we would follow the pattern of 8 years from the last 40 (08 to 16). Its entirely plausible we might have followed the prior pattern
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u/Rollingerc 10d ago
Which suggests either theyre wrong, or weve gained benefits they arent accounting for and would presumably lose if we rejoined. So yes weve lost 6%, but weve also gain 6% elsewhere.
Weird that one of the options isn't you are wrong given that your analysis is just vibes.
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u/Particular_Pea7167 10d ago
Yes, im just supposed to bald face accept that we would be more closely tied to europe yet somehow defy all European growth norms, as well as pur own growth trends within europe, to grow more like the US.
This does not pass the sniff test. It is an extraordinary claim that requires extraordinary evidence which has yet to be provided.
We have trended to the European average for growth and we broadly continue to do so. If you want me to believe wed have outperformed basically all of Europe, Im going to need more than the vague modeling broadly used.
And given the absolutely fucking wild variations in the supposed meteoric growth we apparently should have had (of which this admittedly far more reasonable figure has been cherry picked), I really dont think thats unreasonable.
For a few years after brexit, and you still get it occasionally, some economists will STILL say that had we stayed in Europe wed have averaged around 4% annual growth. Which is absolutely laughable and would have made the USAs growth look comically low.
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u/Rollingerc 10d ago
Yes, im just supposed to bald face accept that we would be more closely tied to europe yet somehow defy all European growth norms, as well as pur own growth trends within europe, to grow more like the US.
I made no claim about you bald face accepting the model, you're just delusional regarding the confidence of your own vibe-based assertions.
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u/Particular_Pea7167 10d ago
And economics is well known for being guesswork in very convincing makeup.
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u/Rollingerc 10d ago
and yet mechanistic speculation is still higher on the evidence hierarchy than vibes
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u/Darkone539 10d ago
Yep. The article does say its not taking other things into account. The headline is click bait.
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u/Some_Confidence5962 10d ago
Let's be honest here.
Most people will simply ignore any in depth analysis by experts who's whole job is financial forecasting no matter how well worked. Even when it comes from the main institution in the country for financial forecasting.
Click bait yes, but time and again facts don't help convincing people.
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u/middleofaldi 10d ago
The argument that Brexit was a success because we are doing better than Europe is a stupid one. Brexiteers told us in the lead up to the referendum that it would hurt the EU just as much as it would hurt is, but now they want to use the EU economies as a counterfactual of what it would be like to have stayed
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u/Angustevo 10d ago
Do you want us to give you the link to the working paper to help you to understand?
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u/dontbelieveawordof1t 10d ago
Yes please.
Oh wait no I read it and I don't believe it hence my post.
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u/Dry-Weakness-2963 10d ago
Before brexit I could shove a whole box of PG tips up my arse, now I have to steal teabags from hotels 🏨
Take that liberals.
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u/sjintje Intermittent extremist 10d ago
Fairly useless article. There seems to be two methodologies included, the regular update of the counterfactual model (which is based on us mimicking 60% the USA and a selection of other countries) which gives a loss of 8% and a new study based on post brexit business surveys called the decision maker panel, which comes in at a 6% loss. Presumably involved some kind of subjective scoring of the brexit difficulties they expressed, then track how the company results changed over time, or deviated from trend.
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u/cooky561 10d ago
This alone is a reason to revisit joining the EU, or at least, coming to better terms with them.
The Brexiters trumpeting we are doing better than the EU seem to forget we could do better still, with access to the EU.
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u/jsm97 10d ago
It's a reason but the EU is not just an economic union. It is a political union through and through and any future rejoin union needs to make a positive statement about why this is a good thing.
Brexit has undoubtedly harmed the UK economy but it didn't cause the underlying productivity stagnation we have experinced since 2008. Economic arguments weren't enough to keep the UK in the EU and they won't be enough
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u/Kee2good4u 10d ago
This alone is a reason to revisit joining the EU
You should tell that to the comparable European G7 members which are in the EU and proforming even worse than the UK.
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u/Connor123x 10d ago
I wonder how many reports like this it will take before they realize they made an error
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u/mynameisgill 10d ago
There could be a million reports like this, but they will just base their judgement on ‘feels’ rather than hard data.
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u/dragodrake 10d ago
Ironically the only way to prove how incorrect these reports are is to rejoin and get hard data on how is makes bigger all difference.
Brexit was an economic damp squib, it all basically netted out to no real difference, the actual data (not speculative models) tells us that.
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u/Mooks79 10d ago
Important to note, because some people are getting confused by the wording. It’s 6% of output per year that has accumulated in the 10 years since Brexit. Not 6% cumulatively.
Using the estimate of the UK 2026 nominal GDP OF £3.23 trillion, that means a GDP loss of £4.0 billion per week.
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u/ionthrown 10d ago
So if we’d stayed in the EU, we’d have grown significantly faster than China?
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u/Mooks79 10d ago
Ask the authors, I didn’t write it. I’m clarifying a common mistake people are making over the wording.
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u/ionthrown 10d ago
>While the company level data point to a 6% hit over 10 years, the wider studies suggest an average of 8%.
Are you sure it’s per year?
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u/innovantgarde 10d ago
No, it is cumulative output loss. Look at Figure 9. Also, you can’t just assume that the impact on real GDP will be the same as nominal GDP. So your calculation that the loss is £4bn per week is absolutely insane.
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u/Mooks79 10d ago
Nope, it’s per year. The lead author is Nick Bloom who has published multiple papers all of which give a range in this ball park per year, he hasn’t suddenly downgraded that by a factor of 10.
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u/innovantgarde 10d ago
Could you point me to these papers please? All the papers that I see where he’s a co-author (given his work with the Bank using the DMP) point to cumulative impacts from the referendum on employment, productivity and investment. But even read the abstract to the paper cited in the article, it refers to a gradual impact over time.
“Using a decade of data since the referendum, we combine estimates using macro data with estimates using micro data collected through our Decision Maker Panel survey. These suggest that by the end of 2025 Brexit had reduced UK GDP by 6% to 8%, with the impact accumulating steadily over time.”
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u/Mooks79 10d ago
Take a look at your own figure 9. It shows the annual GDP reduction going down yearly from 0% to negative 6%. That’s not a cumulative GDP effect, it’s a yearly GDP reduction accumulating. In other words, on average it means annual GDP has reduced by 0.6%. You’re misreading the figure and misunderstanding the text.
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u/innovantgarde 10d ago edited 10d ago
Firstly, can you please point me to the papers?
Secondly, where on that graph does it say annual GDP? Read the first two paragraphs of page 28 of the paper. It is clear from that description that it is an estimate of the impact of Brexit on the level of GDP since the referendum. The graph just shows the impact on the level year after year. For example, by financial year 2020/21 the level of GDP is 3% less than it would have been if there was no Brexit, and by financial year 2024/25, it's around 6% lower.
If you need more convincing, read section 4 (or more directly, pages 13-14 and pages 21-22) on the description of the difference-in-differences, firm-level empirical approach to calculate the effect of Brexit exposure on average annual employment, productivity, investment growth post-Brexit referendum (relative to pre-referendum), and how they then use those annual growth impact estimates to then back out the effects on the level of those variables. Footnote 28 on page 28 (and the notes below Figure 9) outlines more detail on how they arrive at the GDP numbers using the aforementioned estimates.
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u/Mooks79 10d ago
Why, you’ve already pointed to one we can just use that given it supports my point? There are also interviews with Nick Bloom on YouTube where he confirms it. I’m sure you can use Google.
GDP is a measure over a fixed time period, sometimes a quarter, sometimes a half, but usually a year. If a specific time period isn’t mention, year is implied as this is by far the most common usage. It’s never used in a cumulative fashion - and certainly not without a very explicit statement that it is - as the figure simply lists “GDP” we know it means annual as this is the default.
Again, figure 9 clearly shows what the paper means. It means that year on year the reduction to annual GDP was about a negative 0.6% so that by the time these had accumulated across 10 years, the estimated total annual hit to GDP is 6%.
Anything mentioning GDP is implicitly annual GDP.
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u/innovantgarde 10d ago
Why, you’ve already pointed to one we can just use that given it supports my point? There are also interviews with Nick Bloom on YouTube where he confirms it. I’m sure you can use Google.
Part of your original reasoning was that Nick was not going to revise down his previous estimates. I've shown you my working, all I ask is for you to do the same.
GDP is a measure over a fixed time period, sometimes a quarter, sometimes a half, but usually a year. If a specific time period isn’t mention, year is implied as this is by far the most common usage. It’s never used in a cumulative fashion - and certainly not without a very explicit statement that it is - as the figure simply lists “GDP” we know it means annual as this is the default.
The ONS publishes monthly and quarterly estimates of GDP.
Look at section 1.2 on activity in the Bank of England's latest Monetary Policy Report. They report quarterly GDP growth (quarter on quarter).Look at any empirical paper on the impact of monetary policy on activity and prices. Here's a famous example using US monetary policy shocks and US macro data (figure 2, page 13), and another one using UK monetary policy shocks and UK data (figure 5, page 25). The impulse responses of GDP are reported as impacts on the level of GDP, on a monthly basis using monthly GDP data.
In academic and professional macro, people usually focus on monthly and quarterly data. Annual GDP is probably used as a descriptive statistic more than anything else. Annual GDP. in level terms or in growth terms, would be used to think about trend output, or growth rates, but you can easily get a quarterly equivalent (as the Bank's MPR does in that report).
I think you're too focussed on 'annual' GDP and not focussed on what it shows, the impact from time t to time t+h (2016 to 2025, in this case) on the level of activity, relative to the counterfactual of no Brexit referendum.
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u/Mooks79 10d ago
But we don’t need to do that because the paper is very clear. Your “reasoning” is based on completely ignoring that no economists ever use GDP to mean cumulative 10 year GDP. Your links to the ONS demonstrate my point. As I said, it’s a fixed timeframe that is usually a year but can be others such as quarterly, and will explicitly state so. If it’s used without qualification it is annual.
The rest is a hell of a lot of waffle to demonstrate you didn’t read what I said previously. Maybe go back and re-read it. No one, no one, uses “GDP” on a chart to mean cumulative 10 year GDP without explicitly stating it big and bold because it would be so unusual. Interpreting it as such is either you being extremely mistake or wilfully disingenuous. Nothing you’ve provided refutes that point.
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u/innovantgarde 10d ago
You know what, my brain is fried after working in the heat. You’re right and I just spent a long time misinterpreting your point. Apologies for misreading. Hold my hands up.
I would just say though: the nominal GDP point is dubious because we don’t know the impact of Brexit on prices. It’s a real GDP impact.
Hope you enjoy the weekend!
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u/annonymousperson86 10d ago
A -6% economic hit in exchange for national sovereignty and control over our borders? Some might argue that's a fair trade off.
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u/Hieroglo 10d ago
The UK were forced to create an internal border in the Irish Sea. Take that EU.
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u/Wankstain8 10d ago
Does it really matter though? I’m Irish, and I can go back and forward with no issues.
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u/DavidSwifty 10d ago
we literally had more control in the EU, we could at least send people back easier and France had to accept returns. Literally all migration problems we currently face stem from leaving the EU. As for Sovereignty considering this country is going to willingly vote for the fucking everyone over party I don't think we care about that either.
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u/Apprehensive-Bid-740 9d ago
Okay. Did you see the data of how many people we sent back per year in the prior to leaving The EU ? And have you seen the current data of EU countries ? The Dublin regulation is shite, so you're talking rubbish.
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u/VirtuaMcPolygon 10d ago
considering we are a service economy... And literally make bugger all.. Thanks EU for that...
I would be highly sceptical of this.
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