Boris Johnson’s deal is bad for the UK economy

All discussion of Brexit right now is relentlessly focused on the short term. Politicians and reporters analyse minute by minute, hour by hour, whether Boris Johnson and the EU can bridge their differences and get a deal across the line by tomorrow’s Brussels summit. We shall know soon enough.

All this, however, distracts from the issue that ought to be of primary concern: that Mr Johnson’s proposed Brexit pact is bad for the UK economy and will leave most British citizens poorer.

As Simon Fraser, former head of the Foreign Office, tweets today as he watches the media frenzy in Whitehall and Brussels: “Are we losing sight completely of what a lousy long-term choice Brexit is for this country?”

The point about how negative the Johnson deal is for the UK economy is brought out in this piece by Anand Menon and Jonathan Portes of the think-tank UK in a Changing Europe.

Their argument is that we should look behind the Northern Ireland settlement that is the focus of today’s negotiations. What really matters is that Mr Johnson is seeking a goods-only or “Canada minus” deal for the rest of the UK.

This will involve only minimal coverage of services, they write. “It will also involve significant non-tariff barriers on trade”, because there will be extra costs for business as the UK operates its own customs regime. 

This means the Johnson deal is far worse for the economy than Theresa May’s. Menon and Portes calculate that, under the May deal, income per capita would have been 1.7 per cent lower than under continued EU membership.

The equivalent figure for the Johnson deal is 2.5 per cent lower while that for a no-deal Brexit is 3.3 per cent.  

In this FT piece, Chris Giles says the Johnson deal therefore amounts to every person in the UK missing out on £2,000 of income on average each year.

This isn’t the only issue that should be of concern with the Johnson deal. Another is what it would mean for the future of the UK.

Under the Johnson proposal, Northern Ireland will enjoy a special status, one in which it remains part of the UK but closely aligned to Europe’s single market and customs union.

If this vision is realised, the Scottish National party is bound to argue that it undermines the argument that the Union is a “partnership of equals”. Scotland (where a majority voted Remain) is bound to demand similar treatment to Northern Ireland, fuelling the demand north of the border for independence.

These economic and constitutional issues are a crucial concern of the Johnson deal. It is therefore essential there should be the fullest possible public debate over the pact if it is agreed.

The deal that Mr Johnson proposes is one that will make Britons poorer and the UK less constitutionally stable. In a sensible world, this would surely be put to the public in a confirmatory referendum. Instead, it may end up being settled by MPs after a few hours of debate. 

Further reading

Northern Ireland’s DUP faces hard choices on trust and Brexit “Boris Johnson has tried, over the course of the last 24 hours, to persuade the 10 MPs of Northern Ireland’s Democratic Unionist party that he is not about to betray them in his increasingly frenetic search for a Brexit deal. But the DUP, which is meant to prop up the prime minister’s government, does not trust him: the party fears that he is about to put barriers up between Northern Ireland and the rest of the UK as the price for securing a Brexit deal with the EU.” (Laura Hughes and George Parker, FT)

The eight mistakes I saw the UK make in the Brexit negotiations (Syed Kamall, BrexitCentral)

Can the SNP meet the three conditions for an Independence Yes vote? (Sir John Curtice, PMP)

Pound dips as traders brace themselves for dramatic swings  Read more