Monday, 18 September 2017

Brexit dividends

In his latest pitch for the Conservative leadership, Boris Johnson has returned to the ‘promise’ to spend an extra £18 billion a year (£350 million a week) on the NHS following departure from the EU.  The figure has been widely discredited many times and even most of those responsible for promoting it during the EU referendum have long since admitted that the ‘Brexit dividend’ – i.e. the amount of money available for other things because it’s no longer being sent to ‘Brussels’ would be a lot less than that.
I’d go further – I’d argue that there will be no Brexit dividend for the foreseeable future.  Perhaps there may be in the long term, if the economy really does outperform to the extent that Brexiteers believe want the rest of us to believe, although it’s beyond any reasonable or realistic forecasting window so we’ll never actually know whether we would have been better off staying in or not.  But in the short to medium term, most recognise that there will be a hit to the economy, and coupling that probable reduction in GDP, or at the least reduction in growth of GDP, with the requirement to spend a lot more on replacing all the EU agencies with UK versions, increasing the spend on managing the physical and economic borders, and the other increased costs which will come in the wake of Brexit, I believe that zero is a reasonable estimate of the Brexit dividend within any reasonable forecasting period.
Having said that, I welcome Johnson’s statement that the UK Government can spend an extra £18 billion on the NHS if it wants to.  And I agree with him; they can – it’s just that it has nothing at all to do with Brexit.  Looking at the detail of what has been said by Johnson and his supporters, that’s a truth which they come close to acknowledging themselves.  £8 billion of that total – more than 40% - has already been committed and is in no way contingent on Brexit.  What Johnson has asked for is that an extra £5 billion a year be made available in 2019 and a further £5 billion in 2022.  Given the ease with which more than £1 billion was found to buy a coalition partner, and the total government spend of more than £770 billion per annum, this isn’t much more than small change to HM Exchequer – less than 1.5% of expenditure.
However, for a moment, let’s assume that there is a relationship with Brexit.  Part of Johnson’s argument is that the UK should not honour any perceived commitments to EU budgets after the date of departure, and he wants a maximum transition period of six months.  If he’s right, then why isn’t the whole of the extra money available immediately?  Why do we need to wait until 2022?  And if he’s wrong, then where is the 2019 tranche of money coming from?  The answer to both of those questions is very simple – the initial premise is wrong, and a decision to spend more on the NHS is not contingent on Brexit; it’s a simple matter of policy.  The only reason for linking it to Brexit is to attempt to persuade us that Brexit has a short term benefit, when he knows as well as anyone else that it does not.  But then, Boris and truthfulness have been estranged for a very long time.


Spirit of BME said...

The one thing nobody is talking about in regard to the NHS and Brexit, is that leaving will (strangely) preserve the NHS as we know it.
The Fourth Reich (EU) has again reaffirmed its intensions for closer budgets and operations and it is only a matter of time when the financial provision of medicine and care will be on the agenda.
In Berlin. Mrs M or Mutti is clearly in favour of the German model of a mixture of private insurance and government support and this model in various degrees can be seen throughout the Reich. It is only a matter of time when a Directive from the administration H.Q. in Brussel`s will dictate this funding model on the existing 27 vassal states.
One got a hint of this in the TTIP proposed agreement, where opening up the market to private companies was seen in H.Q as not a problem and were somewhat surprised at the complaint from the UK and Wales, where such talk is as an article of high treason.
Mutti is on course to win this week’s election, but at best she will not get a government together (the Netherlands, are six months without one) until the end of the year or at worst April. Brussels will have to wait to get started on serious negotiations and in March there is a high probability of an election in the sick economy of Italy- hang on to your hats!

John Dixon said...


Are you by any chance familiar with Godwin's Law? It's just that you do seem keen to bring the past into all discussions of Brexit..

Spirit of BME said...

I was not aware of Mr Godwin`s Law, I can`t see it applying in the chat rooms of China or Japan because he is unknown there, especially by the younger generation, so it`s a rather broad simplification.
Gordon Wilson of the SNP was the first person I heard use the phrase and as the movers and shakers live in Berlin that is why he thought it fitted, if they lived in Paris I expect he would have called it the Napoleonic Empire.