'We find no statistically significant ongoing economic downside of leaving the EU,' says respected Professor (2023)

How the effects of Brexit on trade, investment, and GDP have been miscalculated in recent work

'We find no statistically significant ongoing economic downside of leaving the EU,' says respected Professor (1)

Montage © Facts4EU.Org 2023

Professor Patrick Minford provides a compelling argument, summarised by Facts4EU and CIBUK

Ever since the UK voted to leave the European Union following the historic referendum result in 2016, arguments have raged over the impact of Brexit on the British economy.

Analysis from the mainstream media has been overwhelmingly negative. But as the distinguished economist Professor Patrick Minford argues, closer examination of the data makes it almost impossible to jump to such conclusions. The Economist declined to publish this, so we are doing so.

Brexit Facts4EU.Org Summary

How the short run effects of Brexit on trade, investment and GDP
have been miscalculated in recent work

By Professor Patrick Minford CBE, of Cardiff Business School, Cardiff University

The full paper can be read here

Across a range of criteria - trade, levels of investment, or GDP – Professor Minford’s findings are unambiguous:

“We find no statistically significant ongoing effect of leaving the EU.”

As expected, the volatility in the data caused by the external shocks of war and disease make the case for an identifiable Brexit-related economic shock almost impossible to compute.

In that sense, argues Professor Minford, “the Brexit effects ‘found’ by media commentators are therefore of doubtful validity.”

About the author: Since 1997 Professor Patrick Minford CBE has been Professor of Applied Economics at Cardiff Business School, Cardiff University. Previously he was Professor of Applied Economics at the University of Liverpool.

In 2016, Prof Minford was a key member of the ‘Economists for Brexit’ group which stood against the consensus view of many economists, and advocated the UK’s departure from the European Union.

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We are pleased to share Professor Minford’s article with our readers in this summarised version, with a link to the full edition below this.

'We find no statistically significant ongoing economic downside of leaving the EU,' says respected Professor (2)

Background to the current debate

With multiple economic shocks reverberating around the world from Covid to Ukraine and the rising cost of energy, discerning a ‘Brexit effect’ amongst all of these involves a very high level of forensic analysis.

The way this is done is by an ‘Event Study’

The methodology for analysing effects on economic parameters is known as an ‘event study’. That is, to set out a “’normal relationship’ determining the economic variables of interest and then to identify the point of time at which the Brexit element intervened; this key date of Brexit arrival then allows us to identify the Brexit effect mathematically as a shift in the relationship definitely due to Brexit owing to its coinciding with that date.”

With so many other economic shocks occurring before and after Brexit, the question arises whether the estimated effect of Brexit is statistically significant.

MEASURING THE BREXIT ‘EVENT’

Comparative Methodologies

Professor Minford discusses some of the comparative methodologies commonly used by economists for estimating the effects of an economic event in one country against a group of others.

In particular he highlights the danger of the ‘doppelganger’ (‘D’) method: “in which a group of other economies which in the past has behaved similarly to the UK is compared with the UK over the period since Brexit; if performance changes this is attributed to Brexit.”

However the real danger of this ‘D method’ is that :

“it identifies the effect of Brexit as any changes in the UK’s performance since Brexit relative to the D group.“This is manifestly incorrect. There are many other shocks to both the UK and this other group occurring both before and after Brexit that can between them generate these changes.”

Measuring the impact of the Brexit Event

Instead of the ‘D method’, the preferred benchmark comparator is the OECD average where no selection is needed and any comparisons with the UK economy is guaranteed free of selection bias. However, rather than use any comparator which will necessarily differ from the UK, it is better to use the UK’s own relationships over past and present to detect shifts in behaviour due to Brexit.

Professor Minford outlines in some depth the standard economic methodologies which are used to identify the ‘shock’ of Brexit and to estimate its size in comparison with the other group.

Having established the method, it is now possible to use economic theory to measure the impact of Brexit on the UK economy.

‘Temporary and minor disruption’

On the basis of the detailed economic analysis, any disruption following Brexit is to be expected but should only be temporary as the UK remakes its trade deals and recalibrates its economic relations with the EU via the Trade and Co-operation Agreement (TCA).

MEASURING BREXIT: TRADE, GDP & INVESTMENT

Finally, as Professor Minford explains

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“Any effects of Brexit must come through via trade, so we explore here the effects on trade as well as those on GDP and investment. Our method avoids any selection bias by simply using the OECD average as the group of countries to compare with the UK when we are gauging whether the comparison shifted post-Brexit.”

From there, Professor Minford applies a set of economic regressions across trade, GDP and Investment, regressing UK data onto OECD data. He also examines effects found in the UK’s own relationships, with no comparator at all- the preferred method.

In each and every case, there is no significant effect of Brexit.

CONCLUSIONS

Professor Minford’s findings are clear and unambiguous:

“Whatever relationships we examine, whether trade, investment or GDP,
we find no statistically significant ongoing damage of leaving the EU.”

Introducing a Brexit ‘dummy variable’ economic model into the regressions above made no significant difference. Brexit was just one of many disruptive economic shocks to the UK economy over recent years and estimating its effect is ‘fraught with uncertainty.’

Economic theory points to disruption to UK-EU trade in the short term, but the aim of the UK-EU Trade and Cooperation Agreement is to create barrier-free access to trade, so any current disruption should dissipate over time.

A full statistical analysis including comparative data regression tables can be found in Professor Minford’s full article which accompanies this summary explanation. Readers can access it here.

Observations

As one member of the Facts4EU team put it memorably after an interview we conducted with him a few years ago: "Patrick's the best economics professor I never had."

With The Economist declining to publish Professor Minford's work, Brexit Facts4EU.Org and CIBUK.Org were pleased to step up to the plate.

His analysis might not suit The Economist's pro-EU, anti-Brexit leanings, but it is surely important that differing views are read and considered carefully. Professor Minford is a highly personable and erudite man who has previously helped the Facts4EU team over the years. He freely admits that "this stuff is quite tricky" for the average reader but when you speak to him he does everything possible to make his complex work accessible.

We much appreciate him allowing us to summarise his latest paper for a wider readership. For those who have studied economics, we recommend reading his paper in full. His methodology is comprehensive and sound and his conclusions are unequivocal. In short, Professor Minford and his team can find no evidence for the wild claims of the Rejoiner movement that Brexit has had any long-standing detrimental effect on the UK economy.

We hope readers found this interesting.

We must get reports like this out there

Summary reports like the one above take far longer to research, write and produce than many people realise. If they were easy, readers would see other organisations also producing these daily.

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However, there’s little point in the Facts4EU.Org team working long hours, seven days-a-week, if we lack the resources to promote them effectively – to the public, to MPs, and to the media. This is where you come in, dear reader.

Facts4EU.Org needs you today

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We badly need more of our thousands of readers to become members, to support this work. Could this be you, today? It's quick and easy, we give you a choice of two highly secure payment providers, and we do NOT ask you for further support if you pay once. We just hope you keep supporting us. Your membership stays anonymous unless you tell us otherwise.

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[ Source: Professor Patrick Minford ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Fri 20 Jan 2023

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FAQs

What country decided to leave the European Union? ›

Brexit (/ˈbrɛksɪt, ˈbrɛɡzɪt/; a portmanteau of "British exit") was the withdrawal of the United Kingdom (UK) from the European Union (EU) at 23:00 GMT on 31 January 2020 (00:00 1 February 2020 CET). The UK is the only sovereign country to have left the EU or the EC.

Why did the UK leave the EU simple? ›

Factors included sovereignty, immigration, the economy and anti-establishment politics, amongst various other influences. The result of the referendum, which was not legally binding, was that 51.8% of the votes were in favour of leaving the European Union.

How does Brexit affect the European Union? ›

The Brexit/trade agreement led to a change in duty and in VAT. For instance, EU buyers of British-made items now pay their national VAT rather than the (previously applicable) British one. Products sold by British vendors but made (for example) in China may be subject to additional import duties.

When did the UK leave the EU? ›

A timeline of the process is available on the European Council website. As a result, at 11pm GMT 31 January 2020 (10am AEDT 1 February), the UK formally ceased to be a member state of the EU. The UK and EU then entered a transition period until 31 December 2020.

Can a country just leave the EU? ›

Article 50 of the Treaty on European Union (TEU) states that "Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements". As of 2022, the United Kingdom is the only former member state to have withdrawn from the European Union.

Can a country be forced to leave the EU? ›

Article 7 of the Treaty on European Union is a procedure in the treaties of the European Union (EU) to suspend certain rights from a member state. While rights can be suspended, there is no mechanism to expel a state from the union.

Why would someone want to stay in the EU? ›

EU citizens have an additional layer of protection: they are protected by the EU's Charter of Fundamental Rights, as well as by their own national laws. The Charter consolidates in a single document all the personal, civic, political, economic, and social rights of EU citizens.

Why Brexit is good? ›

There are a great many benefits to Brexit: control of our democracy, borders and waters; control of our own money, helping us to level up across the country; the freedom to regulate in a more proportionate and agile way that works for our great British businesses; benefits for people that put money back in their ...

Did UK leave Europe with no deal? ›

The Parliament of the United Kingdom ratified this Agreement on 30 December 2020 and the European Parliament ratified it in late April 2021. The EU and UK agreed to apply the draft agreement with effect from 1 January 2021.

How does Brexit affect global economy? ›

The desire to pursue a 'hard' Brexit has resulted in a major increase in trade barriers and trade costs in goods and services, as well as new restrictions on migration flows. The costs of Brexit so far also appear to be unevenly distributed, with areas that voted most heavily for Brexit the worst affected.

Can I still live in Europe after Brexit? ›

If you were lawfully resident in an EU country before 1 January 2021, your rights are protected by the Withdrawal Agreement. You continue to have broadly the same rights to live, work, study and access benefits and services as you had before Brexit.

Has Brexit had an impact on the economy? ›

The weaker pound has left UK households poorer by increasing the cost of imports, resulting in higher inflation and lower real wage growth. The International Economic Review estimates that Brexit has increased consumer prices by 2.9%, and in turn cost the average household £870 per year.

What was the leading reason the UK voted to leave the EU quizlet? ›

The issue of immigration was one of the key reasons to vote leave and this was essentially down to the Free Movement of People. What has been the impact on Brexit so far?

Is Brexit good for the UK? ›

The economic effects of Brexit were a major area of debate during and after the referendum on UK membership of the European Union. The majority of economists believe that Brexit is likely to harm the UK's economy and reduce its real per capita income in the long term, and the referendum itself damaged the economy.

Can EU citizen live in UK? ›

If you're an EU , EEA or Swiss citizen

Irish citizens can continue to enter and live in the UK .

Does leaving the EU affect travel? ›

For holidays after Brexit, you only need a visa for a country in the EU, Iceland, Liechtenstein, Norway or Switzerland if you're planning to stay for more than 90 days in any 180-day period. From 2022, the EU is introducing a European Travel Information and Authorisation System (ETIAS).

Can EU citizens live anywhere? ›

As an EU citizen, you have the right to move to any EU country to live, work, study, look for a job or retire. You can stay in another EU country for up to 3 months without registering there but you may need to report your presence. The only requirement is to hold a valid national identity card or passport.

Can EU citizens move freely? ›

Citizens of EU member states are automatically citizens of the European Union. This means that they can move freely around the countries of the EU, and have the right to live in those other countries if they fulfil certain conditions.

What happens if you stay too long in the EU? ›

Overstaying 90 days in the EU can result in deportation

If you overstay 90 days in the EU, you risk deportation. Countries can legally imprison you, deport you, or give you a limited number of days to leave.

Can I leave the EU and come back? ›

Most visitors (including Americans) are allowed to spend 90 days in the Schengen Area in every 180-day period. The easiest way to think of it is that you can visit for 3 months and then you have to leave for 3 months before you can return.

Do the French want to leave the EU? ›

However, when asked about an actual departure from the EU, 45% of French wanted to stay in the bloc while 33% expressed a desire to leave. The figure in favour of remaining increased to 60% in a subsequent poll in 2019.

What are the advantages and disadvantages of the EU? ›

Positives and Negatives of EU (European Union)
  • No tariffs and free trade within Union.
  • Creates a sense of unity.
  • Stops richer nations such as Germany, France controlling less wealthy nations.
  • Common currency reducing currency exchange fluctuation.
  • EU opened up job opportunities.
  • No conflict between affiliate nations.
Jun 3, 2016

Can EU citizens work in US? ›

You will need a work visa if you want to work temporarily in the United States. As described, there are different work visas for the United States. These so-called U.S. nonimmigrant visas differ, for example, in the type of work the applicant performs, the length of stay, and the type of visa application process.

Is Brexit causing inflation? ›

Brexit is partly to blame for historically high inflation in the UK by causing labor shortages, strengthening pricing pressure among firms and weakening the economy, Bank of England chief economist Huw Pill said.

Is UK worse after Brexit? ›

As in other countries, there are numerous factors behind the UK's economic woes — not least the fallout from COVID-19, Russia's war on Ukraine and the consequent energy crisis — but there is a near consensus among economists that Brexit has made them worse.

Is Brexit hurting the UK economy? ›

Brexit has erected trade barriers for UK businesses and foreign companies that used Britain as a European base. It's weighing on imports and exports, sapping investment and contributing to labor shortages. All this has exacerbated Britain's inflation problem, hurting workers and the business community.

Is the UK still tied to the EU? ›

The United Kingdom left the European Union on 31 January 2020. In 2020 the EU and the UK reached an agreement on their new partnership. It sets out the rules that apply between the EU and the UK as of 1 January 2021.

How many times was UK rejected from EU? ›

During the UK's time as a member state two referendums were held on the issue of its membership, with the first being held on 5 June 1975, resulting in a vote to stay in the EC, and the second, held on 23 June 2016, which resulted in the vote to leave the EU.

How much damage has Brexit caused? ›

“According to the Office for Budget Responsibility, UK GDP is expected to be 4% lower as a consequence of Brexit – this equates to around £100 billion in output and £40 billion in public revenues lost each and every year.

Is Europe going into recession? ›

The eurozone and most EU countries will head to an economic recession in the last quarter of 2022, according to the European Commission's autumn economic forecast.

Which country is better to live in UK or USA? ›

The UK is often considered to be a cheaper place to live. The cost of living in both countries is not the same and can vary depending on where people choose to live. It's also important to note that the average salary for someone in the US is significantly higher than what it would be in the UK due to taxes.

Which is the easiest country to move to? ›

Having garnered a reputation for being one of the most welcoming countries for immigrants and being ranked as one of the most liveable places in the world, Canada is definitely the best and easiest country to immigrate to.

Can you live in Europe without being a citizen? ›

The simple answer is yes! U.S. citizens can travel to most European countries for up to 90 days (within 180 days) as a tourist. However, for those who want to live there, acquiring a long-term visa and/or residency permit is your ticket to calling Europe home.

Why did the United Kingdom not join the European Union? ›

During the UK's time as a member state two referendums were held on the issue of its membership, with the first being held on 5 June 1975, resulting in a vote to stay in the EC, and the second, held on 23 June 2016, which resulted in the vote to leave the EU.

What countries aren't in the EU but want to join? ›

Candidate countries
  • Albania.
  • Bosnia and Herzegovina.
  • Moldova.
  • Montenegro.
  • North Macedonia.
  • Serbia.
  • Türkiye.
  • Ukraine.

Will the EU stop using English? ›

English will remain an official language of the European Union in 2021 after Brexit, the European Commission has confirmed.

Which European countries did not join the EU? ›

Iceland, Liechtenstein and Norway

Although these countries are not members of the EU, their nationals can work in the EU on the same footing as EU nationals, since they belong to the European Economic Area.

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