Five years ago this week, Boris Johnson was celebrating the achievement of leaving the European Union and wondering how he might take advantage of Britain’s newfound freedoms. A virus had other ideas. Covid-19 didn’t just turn our lives upside down and cost many lives; it robbed the then government of the chance to seize the initiative and prove that Brexit was worth the pain and inevitable disruption. For frustrated anti-Brexit campaigners, the pandemic provided them with ammunition to claim that their worst predictions had been realised. Falling economic growth, rising inflation, empty supermarket shelves – all these came to be blamed on Brexit, ignoring the rather large spanner which had been thrown into the works of the global economy.
European industries are treated as pieces of heritage which must be preserved against foreign competition
Half a decade on, the anti-Brexit lobby is still trying to claim that our departure from the EU has been a disaster, comparing Britain’s stagnant economy with a counterfactual in which we had never left.However, this argument only works if you don’t look in too much detail at what is happening across the Channel. Germany is undergoing the kind of industrial contraction which Britain experienced half a century ago, accelerated by a foolish energy policy which built reliance on Russian gas and closed down perfectly functioning nuclear power stations even when Vladimir Putin’s troops were amassing on Ukraine’s borders at the start of 2022.
We are in the middle of a government bonds crisis, caused not by Brexit but by the failure of any UK government, Tory or Labour, to balance the books in 22 years. But take a look at France and it is pretty much the same story – and there is worse to come now that the National Rally and the Socialists have conspired to defeat Macron’s plan to rein in public expenditure. The EU, of course, is no stranger to sovereign debt crises, with Greece, Spain and Italy nearly going bust in 2011 because of the stresses placed on their economies by the euro.
Over the past couple of years Spain and Italy have been doing quite well – it is the revenge of the olive belt over Germany and the EU’s north – but that has to be seen in the context of a decade and a half of virtually no growth in southern Europe. In terms of GDP per capita, adjusted for purchasing power parity, the Italian economy is just 0.7 per cent higher than it was in 2008 – an extraordinary lost decade and a half. Britain has at least managed a measly 5.9 per cent growth over that period.
The real story of the past five years is not one of a stagnant UK falling behind a buoyant EU, but of Britain and Europe trapped in the same cycle of relative decline. The US has been outgrowing Europe all century – US growth per capita has risen by 16.3 per cent since the 2008 crash. There are very good reasons why. Europe increasingly treats its industries as pieces of heritage which must be preserved against disrupters and foreign competition. Existing jobs in contracting industries get prioritised over the creation of new ones in more dynamic sectors. It has become hard to close factories and rationalise businesses, as unions and workers’ councils are put at the centre of the process. The precautionary principle has squashed entire industries such as GM crops and fracking. European climate policies revolve around setting restrictive targets and stopping people doing things, instead of encouraging low carbon technologies. Then there is Europe’s work-shy culture. Far from it being just a British phenomenon, the average German employee works 67 fewer hours per year than a decade ago.
The US is not above negative policies – far from it. Joe Biden’s Inflation Reduction Act is a blatant piece of protectionism in disguise, while Donald Trump warns that when he returns to office he’s going to impose punitive tariffs against almost everyone – which may or may not turn out to be a negotiating position rather than a genuine threat. Even so, the US under the Democrats as well as the Republicans has been essentially pro-growth and innovation. Draconian European regulation of tech, in particular, is beginning to look like envy. Europe doesn’t like it that the tech giants are virtually all American. In a list of the top 100 global companies by market capitalisation, the top European company – Novo Nordisk, maker of the weight-loss drug Wegovy – comes in at 15th. Of the 100, only 17 are based in Europe.
Europe prides itself on its regulation, yet so often it has been found wanting. EU financial regulations did nothing to prevent the scandal of Wirecard – the German tech company which collapsed in 2020 after nearly €2 billion went missing. During the Brexit referendum, it was often argued that without the EU’s crack environmental police Britain would be reduced to being a polluted hellhole, yet it was US regulators, not European ones, which caught Volkswagen cheating on its diesel emissions.
Without economic growth, it becomes impossible to sustain that other great claim to the superiority of European civilisation: efficient and universal public services. True, the US healthcare system is an expensive mess, especially for those who fall through the cracks. But we fool ourselves if we think that Europe’s healthcare systems are vastly superior to the NHS. All have similar problems, caused by ageing populations and shortages of qualified staff. The pandemic revealed the inadequacies of Italian hospitals – the country has since been forced to borrow doctors from Cuba. In the Netherlands, even before the pandemic, there was such a shortage of children’s hospital beds that some patients had to be sent to Belgium.
From afar we marvel at European high-speed trains – until we have to catch one. In Germany, a third of long-distance trains run late, worse than in Britain. In France I had to take six trains over the course of four days. Four of them were more than half an hour late and one of them didn’t turn up at all, with no explanation.
Europe is becoming a macrocosm of Athens, where past glories look down on the tawdry reality of the present
Nor is Europe the haven of low crime we like to believe. Rather, violent crime has exploded in the countries which we used to think of as being the safest: in Sweden, where gangs habitually fight with grenades, and the Netherlands, where in February last year the six-year Marengo trial finally resulted in the jailing of Moroccan drug-dealers, but not before the murders of a string of informers, a lawyer and a TV journalist. The identity of the judge had to be concealed.
Ever since referendum night, when a window was broken at a Spanish restaurant in south London (an incident later treated by police as an attempted burglary), Brexit has been accused of unleashing a wave of racism and xenophobia – a ‘frenzy of hatred’ and ‘celebratory racism’, as the Guardian put it. But what happened to the nice liberal EU from which we had separated ourselves? It is the EU which has all the far-right parties – Britain has none currently functioning – and where debate over migration has become rancid. Various attempts to quantify racism and xenophobia across borders have consistently put Britain at the bottom, i.e. least racist and xenophobic.
Europe is becoming a macrocosm of Athens, where past glories look down on the tawdry reality of the present. Brexit did at least give us the chance to escape its low trajectory and develop our own economic system – if not the fabled ‘Singapore on Thames’ then at least something a little more friendly towards economic growth. Yet neither the last nor the present government seems to have had the appetite. Instead, Covid brought big, bossy government back into fashion. Far from stripping regulations, we seem to be determined to outdo the EU in some respects, such as on our zero-emission vehicle mandate which has made life impossible for car manufacturers by forcing them to sell electric vehicles that motorists don’t want to buy. The EU’s own rules are less stringent, allowing an extra five years before a ban on petrol and diesel cars comes into force, and that won’t be a total ban.
It was always going to be the case that while the disadvantages of Brexit, such as increased friction in trade, would become immediately evident, the benefits would emerge over a longer period. Indeed, there was never any guarantee that there would be any benefits at all – what Brexit did was create a blank canvas, not one daubed with an effective vision. But if we are merely going to become a rival brand of European social democracy it is hard to argue that Brexit was worth the bother. That could change if we one day have a government that is prepared to ditch our inheritance from the EU and do something different, but on the current showing it is not going to be Keir Starmer’s. Our first decade outside the EU looks as though it will be a wasted opportunity.
Ross Clark’s Far from Eutopia: How Europe is Failing – and Britain Could Do Better is published on 23 January.
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