Even the “Brexit optimists” on our panel agreed that the prime minister’s plan to drive up wages was “for the birds”.
Emily Carver of the Institute of Economic Affairs said it was possible that wages in some shortage sectors, such as lorry drivers, might rise, but that Brexit was unlikely to lead to higher earnings for the whole economy.
Julian Jessop, who admitted that he was unusual as an economist in supporting leaving the EU, agreed, although he thought there might be benefits from lower regulation costs and non-EU trade in the long term.
Jonathan Portes, professor of economics at King’s College London, said that there was little evidence yet of wage increases even in areas such as hospitality, where labour shortages have been acute. And he made the point that if wages did rise, the money would have to come from somewhere, most likely from companies putting up prices, in which case people overall would be no better off.
The panel agreed that labour shortages were largely the result of coronavirus lockdowns, and affected most countries in the world – workers going home to be close to family and often finding other jobs. Britain may be more affected partly because we relied on foreign workers more, and partly because Brexit makes it harder to import new workers to replace the ones we have lost.
But the high price of natural gas has nothing to do with Brexit, as Anna Isaac, The Independent’s economics editor, explained. That is mostly to do with the world economy bouncing back unexpectedly sharply from the Covid recession, compounded by labour shortages and supply problems.
To watch the event in full play the video below
Brexit: Exploring the hidden costs
Many Independent readers who joined the event demanded to know if there were any benefits to Brexit, and our pro-Brexit panellists did their best to point to sovereignty regained and to the speed of the vaccine programme. Some readers asked if we thought that the hardships caused by Brexit would change the minds of enough voters to reopen the question. The problems of pig farmers, who have had to start killing and burning their stock because of a shortage of abattoir workers, are striking, particularly as farmers tended to be strongly supportive of Brexit.
I said I thought it was unlikely that there would be any appetite among any politicians for reversing Brexit, and that it was hard to imagine the Labour Party even proposing to renegotiate the terms of the EU trade deal. So far, Keir Starmer has talked only of making the existing deal work better.
My thanks to all our panellists for taking part in what was an interesting discussion, solidly grounded in fact rather than rhetoric. If you weren’t able to attend the event, I would say it would be well worth watching the recording.