January 27, 2023

As reported here yesterday, the Centre for European Reform has published an analysis claiming that Britain’s GDP is 5.5% lower than it would have been without Brexit.

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Jacob Rees-Mogg, the former business secretary and leading Brexit enthusiast, has published an article for the Daily Express criticising the methodology used by the CER. The CER has identified a clutch of countries whose economic performance closely matched the UK’s in the decade or more before Brexit, and it has compared the performance of this ‘doppelgänger’ UK (a statistical fiction, based on the performance data for the comparator countries) since 2016 with the performance of the real UK. Rees-Mogg claims this approach is “absurd”. He says:

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[The model] maintains that by membership of the EU the UK economy will do better but then goes on to argue that this country should not be compared to the economies of Germany, France and Italy but to faster growing nations. These two arguments contradict each other.

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If as the CER says the major continental economies are inherently slower growth than the UK surely we would want to be less associated with them and freer to operate globally. The fact that, since we voted to leave, we have performed better than all the major European economies save France, shows our success.

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From the third quarter of 2016 to the second quarter of 2022 the UK grew at 6.2 percent, Germany 5.4 percent, France 7.6 percent, Italy 4.2 percent and Spain 5.9 percent.

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Rees-Mogg is not the first person to criticise the CER methodology on these grounds, and in his report the CER’s John Springford responds to these arguments. He does not accept that France, Germany and Italy would be better comparison countries to provide data on what would have happened to a ‘doppelgänger’ UK that did not vote for Brexit in 2016. He argues:

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Just because countries are of a similar size in a similar region, they do not necessarily have a similar economic model or growth rates. Better doppelgänger countries may be found elsewhere by the algorithm. Indeed, the UK’s growth rate between the introduction of the euro in 1999 and 2016 was markedly different to France, Germany and Italy’s. It was far closer to that of the US.

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The UK is currently the worst-performing G7 nation in terms of quarterly economic growth, my colleague Graeme Wearden writes on his business live blog. He says:

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The 0.3% contraction in UK GDP in Q3 reported this morning is worse than Japan’s 0.2% fall in GDP, while Canada and the US both expanded pacily, by around 0.7%.

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France (+0.2%), Germany (+0.4%) and Italy (+0.5%) all grew in July-September too.

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Rachel Reeves, the shadow chancellor, claims this shows the Tories have lost control of the economy.

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NEW: GDP data has been revised down, leaving the UK with the worst growth in the G7 in the last quarter.

The Tories have lost control of the economy and are leaving millions of working people paying the price.

Only Labour has a proper plan to get our economy growing.

— Rachel Reeves (@RachelReevesMP) December 22, 2022

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Graeme has more on this story on his business live blog.

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Good morning. Two years ago on Saturday, Boris Johnson announced that he had finalised a post-Brexit trade deal with the EU. Never at a loss for superlatives, he said it was “the biggest trade deal yet, worth £660bn”. In his statement he described it as:

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A deal which will if anything should allow our companies and our exporters to do even more business with our European friends.

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He also claimed – falsely – that under its terms there would be “no non-tariff barriers to trade”.

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This morning the British Chambers of Commerce has published a damning report on how that trade deal (the trade and cooperation agreement, or TCA, to give it its formal title, is performing, and it’s damning. As my colleague Heather Stewart reports in her write-up, more than 1,000 business leaders were surveyed and three quarters of them said the deal was not helping them to increase sales, or to expand. Here is her story.

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And here is the chart that shows the key result.

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996.jpg?width=480&quality=85&auto=format&fit=max&s=7cbdb2089a8faafb47b55ede2ab57bf7″,”width”:480},{“src”:”https://i.guim.co.uk/img/media/67fb3736b83a29e77c400d7d64d7577a98a12e85/0_0_996_558/master/996.jpg?width=480&quality=45&auto=format&fit=max&dpr=2&s=95d4b38383b16a55fc806a0bf62a7e6f”,”width”:960}]}],”elementId”:”bc7126bd-e7ae-49b1-88d5-58734eea4c6f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

I’ll post more from the survey soon.

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There has not been much response from the government, but Mark Spencer, the farming minister, has been giving interviews and he told Times Radio this morning he claimed the government did want to reduce “red tape” for exporters to the EU. He said:

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\n

There’s always more that we can do to try and ease the way and the passage of trade. We’re very keen to do that. We’re a free and open trading nation, we want to work closely with our EU colleagues, and we want to try and reduce that red tape, if there is any red tape, on their side of the Channel. So, of course, we want to keep those channels of trade open in both directions.

\n

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In London parliament is not sitting. But in Edinburgh Nicola Sturgeon, the first minister, is taking questions at 12pm, and then MSPs are due to conclude the debate on the gender recognition reform (Scotland) bill. The final vote is due at 2.45pm. It had been expected yesterday but, as my colleague Libby Brooks reports, the debate ran over time.

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I’ll try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.

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If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.

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Alternatively, you can email me at andrew.sparrow@theguardian.com.

“,”elementId”:”689b5b0b-86ea-430f-804f-74a1bdea1a90″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1671701764000,”blockCreatedOnDisplay”:”09.36 GMT”,”blockLastUpdated”:1671702513000,”blockLastUpdatedDisplay”:”09.48 GMT”,”blockFirstPublished”:1671701764000,”blockFirstPublishedDisplay”:”09.36 GMT”,”blockFirstPublishedDisplayNoTimezone”:”09.36″,”title”:”Minister admits more needed to ease trade after damning Brexit business survey”,”contributors”:[],”primaryDateLine”:”Thu 22 Dec 2022 10.23 GMT”,”secondaryDateLine”:”First published on Thu 22 Dec 2022 09.36 GMT”}],”filterKeyEvents”:false,”format”:{“display”:0,”theme”:0,”design”:10},”id”:”key-events-carousel-mobile”}”>

Key events

Rees-Mogg dismisses analysis that UK GDP is 5.5% lower than it would have been without Brexit as ‘absurd’

As reported here yesterday, the Center for European Reform has published an analysis claiming Britain’s GDP is 5.5% lower than it would have been without Brexit.

Jacob Rees-Mogg, the former company secretary and leading Brexit enthusiast, has published an article for the Daily Express criticizing the methodology used by the CER. The CER identified a group of countries whose economic performance was very similar to that of the UK in the decade or more before Brexit, and compared the performance of this ‘double’ UK (a statistical fiction, based on the performance data for the comparative countries) since 2016 with the performance of the real UK. Rees-Mogg claims this approach is “absurd.” He says:

[The model] argues that membership of the EU will improve the British economy, but then argues that this country should not be compared to the economies of Germany, France and Italy, but to faster-growing countries. These two arguments contradict each other.

If, as the CER says, the major continental economies are inherently slower growing than the UK, we would certainly want to be less associated with them and be freer to operate globally. The fact that since we voted to leave we have outperformed all major European economies except France is proof of our success.

From the third quarter of 2016 to the second quarter of 2022, the UK grew by 6.2 percent, Germany by 5.4 percent, France by 7.6 percent, Italy by 4.2 percent and Spain by 5.9 percent.

Rees-Mogg is not the first to criticize the CER methodology on these grounds, and in his report John Springford responds to these arguments. He does not accept that France, Germany and Italy would be better comparison countries to provide data on what would have happened to a ‘double’ UK that did not vote for Brexit in 2016. He argues:

Just because countries are of similar size in a similar region does not necessarily mean they have similar economic models or similar growth rates. Better doppelgänger countries can be found elsewhere by the algorithm. Indeed, the growth rate of the UK between the introduction of the euro in 1999 and 2016 was markedly different from that of France, Germany and Italy. It was much closer to that of the US.

The UK had the worst growth in the G7 in the third quarter, the latest figures show

The UK is currently the worst performing G7 country in terms of quarterly economic growth, my colleague Graeme Worden writes on his business live blog. He says:

The 0.3% contraction of UK GDP in the third quarter reported this morning is worse than from Japan 0.2% decline in GDP, while Canada and the U.S both grew rapidly, by about 0.7%.

France (+0.2%), Germany (+0.4%) and Italy (+0.5%) also all grew in July-September.

Rachel Reeves, the shadow chancellor, claims this shows that the Tories have lost control of the economy.

NEW: GDP data has been revised down, leaving the UK with the worst growth in the G7 in the last quarter.

The Tories have lost control of the economy and are leaving millions of working people paying the price.

Only Labour has a proper plan to get our economy growing.

— Rachel Reeves (@RachelReevesMP) December 22, 2022

\n”,”url”:”https://twitter.com/RachelReevesMP/status/1605832643781836800″,”id”:”1605832643781836800″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”b5213693-08fe-4f98-92a4-293b3f351204″}}”>

NEW: GDP data has been revised downwards, leaving the UK with the worst growth in the G7 in the last quarter.

The Tories have lost control of the economy and are making millions of working people pay the price.

Only Labor has a good plan to grow our economy.

— Rachel Reeves (@RachelReevesMP) December 22, 2022

Graeme has more on this story on his business live blog.

Minister admits more is needed to ease trade after damning Brexit business inquiry

Good morning. Two years ago on Saturday Boris Johnson announced that he had finalized a post-Brexit trade deal with the EU. Never lost to superlatives, he said it was “the biggest trade deal to date, worth £660bn”. In his statement he described it as:

A deal that will enable our companies and our exporters to do even more business with our European friends.

He also claimed – falsely – that there would be “no non-tariff barriers to trade” under the terms of the agreement.

This morning the British Chamber of Commerce released a damning report on how that trade agreement (the Trade and Cooperation Agreement, or TCA, to give it its formal title) is performing, and it is damning. Like my colleague Heather Steward reports in her article, more than 1,000 business executives were surveyed and three-quarters of them said the deal didn’t help them increase sales or expand. Here’s her story.

And here is the graph showing the main result.

Survey on the impact of the Brexit trade deal
Survey on the impact of the Brexit trade deal Photo: BCC

I will be posting more from the survey soon.

There hasn’t been much response from the government, however Mark Spencer, the agriculture minister, has given interviews and told Times Radio this morning that he claimed the government wanted to cut “red tape” for exporters to the EU. He said:

There is always more we can do to try to ease the way and the passage of trade. We are very happy to do that. We are a free and open trading nation, we want to work closely with our EU colleagues, and we want to try to reduce red tape, if any, on their side of the Channel. So obviously we want to keep those trade channels open in both directions.

Parliament is not in London. But in Edinburgh, Nicola Sturgeon, the Prime Minister, will answer questions at noon, and then the MSPs will wrap up the debate on gender recognition reform (Scotland). The final vote is at 2.45 pm. It was only expected yesterday, like my colleague Libby Brooks defeated, the debate progressed over time.

I’ll try to follow the comments below the line (BTL), but it’s impossible to read them all. If you have a direct question, add “Andrew” somewhere and I’ll be more likely to find him. I’ll try to answer questions, and if they’re of public interest, I’ll put the question and answer above the line (ATL), though I can’t promise to do this for everyone.

If you want to get my attention quickly, you’re probably better off using Twitter. I am at @Andrew Sparrow.

You can also email me at andrew.sparrow@theguardian.com.

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