Speaking of delusions of economic grandeur…

 

… this piece in the New York Times about the British economy makes for sobering reading.

An observer of Britain’s “Brexit” debate would be forgiven for thinking that the country’s economy is one of the European Union’s star performers. Brexit’s advocates rarely pass up an opportunity to claim that the European Union economy is the world’s weak link, and that Britain’s reformed, dynamic and flexible economy has little to risk, and much to gain, from leaving it. The reality is rather different. And Brexit threatens to make matters worse.

Britain’s economic performance relative to the other big economies in Western Europe — including France, Germany, Italy and Spain — does not stand out as impressive, at least once the different prices of goods and services across these countries are factored in.

There’s more. It’s only a fraction ahead of France – and as the NYT notes this is routinely characterised as a weak economy in the UK. Indeed listening to BBC podcasts regularly it is fascinating to see all this data because one would think from their Paris correspondents that France was about to slide under the economic waters.

Meanwhile…

If the country’s overall performance looks mediocre, note that it is also highly skewed by London and the southeast of England. In one of the most politically centralized democracies in the world, regions as economically diverse as the northeast of England and London are essentially run as if they face the same challenges, and, Scotland aside, those regions have scant scope to tailor policies to their particular needs. This is part of the reason why, since 2000, poorer regions of Britain have not been catching up with the richer regions of the European Union. Instead, they’ve been falling further behind.

One of the most useful aspects of the piece is the ‘why’, why is Britain so relatively speaking mediocre? It argues that:

…a successful labor market requires more than easy hiring and firing; it needs skilled workers, access to housing and good quality infrastructure. By these measures Britain has some real weaknesses.

A significantly higher proportion of British 18- to 24-year-olds suffer from weak literacy and numeracy than those in France, Germany, Italy or Spain.

And…

And, despite strong population growth and rapid price increases, Britain is building around half as many houses as in the 1970s, and the supply of subsidised (or social) housing has pretty much dried up, making it difficult for many British workers to move to where the jobs are.

Good infrastructure increases productivity by raising the return on investment and boosting foreign trade and can play a major role in addressing regional disparities. But, as the chart below shows, the country has invested less in roads, railways and air travel than other large European Union economies over the last 20 years.

So… Thatcherism, post-Thatcherism, neo-Thatcherism, and so on have gifted the UK more or less nothing. Small wonder that we are treated to so much empty rhetoric from the Brexiteers, they’ve little else.

And as the piece concludes:

A Britain outside of the European Union will inevitably be less open to trade with member states, which will curb competition and productivity growth. Tax revenues will fall, further squeezing infrastructure investment and education spending. That’s why, far from liberating Britain to conquer world markets as a buccaneering trading nation, Brexit threatens to make its mediocre economic performance even worse.

It’s worth keeping in mind that first sentence. It remains perhaps the most odd aspect of Brexit. Essentially the UK has torn up the economic links with its closest and largest economic trading partners. This literally is nonsense. It makes no sense.