Matthew Lynn

What MPs decide about Brexit is becoming irrelevant

What MPs decide about Brexit is becoming irrelevant
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Maybe we will go for a Norway-Double Plus. Or A Canada-Minus. Or Common Market 2.0, or a WTO-Light, an EEA-Doubled, or an Enhanced EFTA or even a Singapore Sling or a White Russian. Okay, scratch those last two. I seem to have mixed up a list of options for leaving the European Union with a cocktail menu. But that pair aside – and who knows, maybe late on a Thursday night MPs will vote them through instead – they are all ways that we might eventually leave.

Amid all the arguments over our departure, however, one point is easily overlooked. For the economy, after we sailed through the original deadline for getting out, it doesn’t make a lot of difference anymore. Leaving the EU was always going to do some damage to business, even if the impact was exaggerated. But that damage would mainly take the form of uncertainty, postponed investment, and the extra paperwork needed for countries outside the Union to trade within the Single Market. Almost all of that has now been done, and whether we stay or go is largely irrelevant.

Even at the time of the referendum, the forecasts of Project Fear were wildly overblown. Productivity, tax rates, labour laws, monetary policy, entrepreneurship, innovation and investment are the kind of factors that genuinely make a difference to how an economy performs. Membership of a biggish-but-not-terribly-successful trade bloc matters a bit, but not that much. Even so, only the most swivel-eyed Brexiteer would deny that, at the margin, it would make some difference. Companies would face a prolonged period of uncertainty. Some investments would be cancelled. Some companies would have to prepare for extra paperwork to deal with EU tariffs; and, in industries such as finance where the EU is rigidly protectionist, they might have to open branch offices inside the Union.

And yet, if you take those one by one, it is obvious the impact has already been felt. Uncertainty? It couldn’t have been much worse. Investment? It has already fallen. Alternative arrangements? I suppose there might be some small factory in North Wales where the MD will come into his office on the morning of April 12


/May 22


/March 28, 2020 (delete as applicable) shrieking: ‘What! We’re leaving the EU? WTF. Why didn’t anyone tell me!’. On the whole, however, it seems reasonable to assume the message has got through to most businesses that our relationship with Brussels has been a little on the rocky side and that, all things considered, if you are selling a few widgets to Germany it might be worth getting the paperwork in place so you could continue to do so after we have departed. If the UK could have reached an agreement a year ago on leaving – and if a free-trade deal had been wrapped up at the same time – it would have been far better for the economy. But that didn’t happen, and it isn’t going to happen now. The result? It doesn’t matter anymore.

In truth, the UK has been drifting away from the rest of the European economy for years, and that is only going to accelerate from here. Figures released by Eurostat last week showed that 47 per cent of British exports go to the rest of the EU, the second lowest of any member state (the lowest is the special case of Cyprus, which, for obvious reasons, trades a lot with Turkey). That was down from 48 per cent a year ago. It has declined by almost ten percentage points in a decade, keeps on going down, and nothing about the last three years is going to stop that. Parliament might decide one day on a form of departure, or just scrap the whole thing as a bad idea from the start. But for businesses it makes less and less difference with every day that passes – and by the time the issue is finally resolved it may make no difference at all.