Should Labour be questioning the economics of Brexit?

Labour came to office last year committed to ‘make Brexit work’ by resetting Britain’s relationship with the EU and thereby ‘deepen ties with our European friends and neighbours’. At the same time, however, the party’s manifesto committed to ‘no return to the single market, the customs union, or freedom of movement’. Of the possibility of rejoining the EU there was no mention at all.

However, the message from Labour ministers in recent weeks has seemingly smudged the red lines that were drawn in Labour’s manifesto. Speaking at a literary festival, Wes Streeting, the health secretary, said, ‘I’m glad that Brexit is a problem whose name we now dare speak,’ indicating that he believed being outside the EU was making it difficult to deliver the economic growth that the government had promised. In a recent podcast, the Deputy Prime Minister, David Lammy, said that it was ‘self-evident’ that Brexit had damaged the economy and noted the economic benefit that Turkey had derived from its customs agreement with the EU. Some in Labour at least seem to have decided that pointing out what they believe are the economic downsides of Brexit might help the party meet the electoral challenge being posed by Reform.

But how wise is this apparent change of tack? After all, until recently, Labour seemed to believe that challenging the Brexit decision would be electoral suicide. However, the decision to leave the EU is now nearly a decade old. Perhaps ministers are simply playing catch-up with an electorate that has long since become disenchanted with how Brexit has worked out?

Since the referendum, the British Social Attitudes survey (BSA) has regularly asked its respondents what they think the consequences of leaving the EU have been for three policy areas that were much debated during the 2016 campaign. The data reveal growing doubts about the economic consequences of leaving the EU together with what it has meant for immigration. Only when it comes to the debate about the implications for Britain’s sovereignty do Leave voters at least still have some of the hope they had for Brexit in 2016.

The Economics of Brexit

Table 1 shows that, on balance, the public in general have always been doubtful about the economics of leaving the EU. In 2015, a year before the referendum, two in five (40%) believed the economy would be worse off outside the EU, while only around one in four (24%) reckoned it would be better off. That latter figure changed little during the course of the initial Brexit negotiations between 2017 and 2019, though the proportion who felt that the economy would be worse off increased to around a half by 2019 (51%). However, in our two most recent surveys as many as seven in ten (69-70%) have said that the economy is worse off because of Brexit, while only around one in ten (9-12%) feel the economy is better off.

^{Source: British Social Attitudes.}

2015: If Britain were to leave the EU, do you think Britain's economy would be better off, worse off, or wouldn't it make much difference?; 2017-9: From what you have seen and heard so far, do you think that as a result of leaving the EU Britain's economy will be better off, worse off, or won't it make much difference?; 2023-4: From what you have seen and heard so far, do you think that as a result of leaving the EU, Britain's economy is better off, worse off, or has it not made much difference?

As we might anticipate, those who voted Remain have largely always been doubtful about the economics of Brexit (see Table 2). But in the period immediately after the referendum at least, only one in six Leave voters (12%) thought the economy would be worse off, while over half (56%) anticipated it would be better off. Now that Brexit has happened, however, around two in five (38-40%) Leave voters believe the economy is worse off, while in our most recent survey in 2024, the proportion saying it was better off slipped to little more than one in five (21%).

^{Source: British Social Attitudes. For details of question wording see note to Table 1.}

It was, of course, unfortunate for the Brexit project that the UK left the EU at a particularly challenging time economically. The COVID pandemic, the Russian-Ukraine war, and the cost-of-living crisis all took their toll on living standards, while the country had already been experiencing low levels of economic growth in the wake of the financial crash of 2008-9. We cannot presume that voters’ perceptions of the consequences of Brexit are based on a careful analysis of the impact of leaving the EU irrespective of these other shocks to the country’s economy. But so far as the politics of Brexit and its continued popularity are concerned, what matters is whether voters are minded to blame Brexit at least in part for the country’s recent economic difficulties. And that does indeed seem to be the case.

But the Brexit debate was not just about the economy. The central message of the Leave campaign in the 2016 referendum was ‘Take Back Control’. In part, at least, this was a reference to the perceived need for the UK to gain control over immigration by ending freedom of movement for EU citizens. However, while the post-Brexit immigration rules that the UK government put in place ended freedom of movement for EU citizens, for non-EU migrants they were more liberal than those previously in place. This decision, together with allowing refugees from Ukraine and Hong Kong into the UK and the knock-on effect of disruptions to migratory flows occasioned by the COVID-19 pandemic, saw net migration to the UK reach an all-time high of over 900,000 in 2022-3. Although more EU citizens have left than moved to the UK since Brexit, migration from non-EU countries has been much higher. Meanwhile, the issue of migration has also been highlighted by record numbers of people crossing the English Channel with a view to seeking asylum.

This experience has had a discernible impact on public opinion. Table 3 shows that not only did well over half of all voters believe before the referendum that immigration would fall if Britain left the EU, but also that that proportion largely held up in the years immediately after the referendum. Meanwhile, less than one in ten believed it would be higher. Now, however, these proportions are reversed. In our most recent survey over half stated that immigration was higher as a result of Brexit, while less than one in ten believe it is lower. The contrast between people’s expectations of what Brexit would deliver and their perception of the actual outcome is truly remarkable.

^{Source: British Social Attitudes.}

2015: If Britain were to leave the EU, do you think immigration to Britain would be higher, lower, or wouldn't it make much difference? 2017, 2018: From what you have seen and heard so far, do you think that as a result of leaving the EU immigration to Britain will be higher, lower, or won’t it make much difference?  2023, 2024: From what you have seen and heard so far, do you think that as a result of leaving the EU immigration to Britain is higher, lower, or has it not made much difference?

Strikingly, the contrast between expectation and perceived outcome is particularly strong among Leave voters (see Table 4). In the immediate wake of the referendum, just over three in five (61-62%) of those who voted for Brexit anticipated that leaving the EU would result in a reduction in immigration. Now, there are hardly any Leave voters who believe that is what has happened. Indeed, Leave voters are even more likely than Remain supporters to believe that Brexit has resulted in higher levels of inward migration.

^{Source: British Social Attitudes. For details of question wording see note to Table 3.}

‘Take back control’ also conveyed the message that the UK would be able to reclaim its sovereignty and avoid having to conform to EU laws and regulations with which the UK government was not in agreement. Table 5 indicates that, immediately after the referendum, just over half (51-54%) thought that leaving the EU would strengthen Britain’s ability to make its own laws. Rather less than three in ten disagreed. Now, the proportion who agree that being outside the EU has strengthened Britain’s ability to make its own laws is only just over a quarter (26%) – half the proportion who anticipated that this was what would happen. Substantially more - around two in five (38-40%) - now disagree that Britain’s ability to make its own laws has been strengthened.

^{Source: British Social Attitudes}

2017-19: How much do you agree or disagree that being a member of the European Union undermines Britain's right to be an independent country that makes its own laws? 2023-4: How much do you agree or disagree that being outside the European Union has strengthened Britain’s ability to be an independent country that makes its own laws?

However, although down on the up to nine in ten or so who, immediately after the referendum, agreed that Britain would be better placed to make its own laws, as many as half of Leave voters (47–51%) still agree that this is what has happened (see Table 6). Only between one in five and one in six (16-20%) disagree. Here, at least, the balance of opinion among Leave voters is still tilted in Brexit’s favour.

^{Source: British Social Attitudes. For details of question wording see note to Table 5.}

Which Perceptions Matter?

This, however, still leaves the question of whether the gap between Leave voters’ expectations and their perception of what has happened has had an impact on their continued support for Brexit. They might, after all, have drawn the conclusion that the reason for their apparent disappointment lies in a failure of the government to have taken proper advantage of the ‘freedoms’ afforded by Brexit rather than because leaving the EU was a misguided decision. In practice, the gap has to some degree undermined Leave voters’ confidence in Brexit. However, it is the doubts that some now have about the economic impact of Brexit rather than the dramatic turnaround in evaluations of the difference it has made to immigration that has proven the more important influence on what their attitude towards Brexit is now.

Although only 70% of those Leave voters who think that immigration is higher as a result of Brexit say that they would vote now to stay out of the EU, that is slightly (though not significantly) higher than the equivalent figure of 65% among those who think that Brexit has not made much difference to the level of immigration or who feel it is now lower as a result. Leave voters’ perceptions of the impact of leaving the EU on immigration make little difference to their current likelihood of supporting Brexit. In contrast, just 39% of those Leave voters who believe the economy is worse off as a result of Brexit say they would now vote to join the EU, compared with 99% of those who think the economy is better off and 78% of those who believe Brexit has not made much difference either way. A loss of confidence in the economics of Brexit has evidently changed some Leave voters’ minds about the choice they made in 2016 in a way that disappointment with what has happened to immigration has not.

Perceptions of whether Brexit has strengthened Britain’s ability to make its own laws also make some difference. Among those Leave voters who agree that it has strengthened that ability, as many as 81% say they would vote to stay out of the EU. In contrast, only 54% of those who either disagree with the proposition or who neither agree nor disagree say they would vote to stay out. The fact that half of Leave voters believe that Brexit has strengthened the independence Britain’s law-making capacity would thus appear to help ensure that, despite their disappointments, many Leave voters would still be willing to vote again for Brexit.

The perception that Brexit has been economically damaging is not then confined to Labour ministers or to Remain supporters. It is also to be found among a significant proportion of those who voted Leave - and this helps explain why opinion polls have long since been reporting that a majority of voters who express a preference would now vote to rejoin the EU. Perhaps Labour ministers are not so unwise after all to have started a debate about the economic implications of the UK’s current relationship with the EU.