It’s not impossible to tell sadly

I’m not for a moment disputing that this is a global thing, and Ukraine/covid are the main sources and are common to every nation.

But, to ignore Brexit is to ignore an important piece of the puzzle for the UK. Brexit has taken a big old handful of sand and thrown it right into the engine of the economy. Frictionless trade was so important, and now it’s….not quite so frictionless. It might all look small, but it adds up. Which is why the pound has slowly, steadily, gracefully fallen over time, and this will give us a bit more inflation that we might have had otherwise. Which is why we will, all other things equal, have a weaker economy than we otherwise would, and more inflation.

Don’t just take my word for it on the sand in the machine thing.

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15% reduction in trade intensity as a central estimate. Just one concrete effect. Anyone who is in the “too small and uncertain to measure” camp just isn’t reading into this.

There is also freedom of movement. Which I won’t get into, as I don’t want to stir up emotions. Whether “things” are better or worse without it is a matter of opinion. But it’s making our labour market much tighter and less flexible. It’s part of the sand in the machine. And this argument that “we’ll all just get paid more won’t we?”. Well I don’t see evidence of that. Firms just leave and go to somewhere where there is (relatively) more labour. Slowly slowly slowly, not off a cliff, but they do. And nobody wants to do s**t but essential jobs. So firms that need that just suffer.

And no, trade deals with New Zealand won’t come close to making us net winners. They don’t even put a tiny dent in the down side. Especially not in a world where transport costs just went through the roof.

So let’s not pretend this isn’t a global issue, cos it is. And let’s not pretend that it’s all due to Brexit, because it isn’t. But equally, let’s not pretend that things aren’t a bit worse because of Brexit, because they are. And what is clear is that the economic pain we all face will be worse and will go on for longer because of Brexit.

Posted By: Under soil heating on August 4th 2022 at 17:10:32

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