Comparing the economy performance of UK and Eurozone helps to catch the roots of Brexit.
Did the Eurozone economic policy - made in Brussels and Berlin - contributed to the success of Brexit? Probably so, and perhaps decisively. Let us see the performance of the economy of the United Kingdom (UK) compared to the Eurozone (EZ) as a whole (ignoring the profound differences inside) on the basis of Eurostat statistics.
The GDP of the two economic areas has had a similar fall in 2009: UK -4.3% and EZ -4.5%. But in the six years following (2009-2015) UK grew by 2% per year (+ 12.5%) while by EZ 0.8% (+ 5.2%). UK growth is due to the private domestic demand: consumption (+49.5%) and investment (+64.4%), while in EZ consumption only grew by 9.3% and investments by 4.9%. The growth of EZ is mainly due to exports: the trade balance has gone in the six years from a net positive balance of +1.4% to +4.4% of GDP (thanks mainly to Germany), while the UK trade balance deficit remained passive, going down only very slightly (from -2.3% to 2.1%).
The difference is not so much in monetary policy; it is true that the Bank of England did a strong monetary expansion, like in USA, immediately after the outbreak of the financial crisis, but in 2013 the ECB lowered interest rates significantly below the British ones, which were kept stationary at 0.5%. The most significant difference was in fiscal policy: in 2009 the UK brought the deficit to 10.7% of GDP, opposite to 6.3% of EZ, and later on reduced the deficit more gradually, down to 4,4% in 2015, while EZ shrank to 2.1%. Cumulatively over seven years UK has pumped into the economy 23.8 GDP points more than EZ. It should be remembered that the UK has not signed the fiscal compact.
The consequence in the kind of economic policy can be see looking at employment and unemployment rates: in the UK the percentage of employment (age 20-64) falls in 2008, compared to the previous year, from 75.2 to 73.9, but then goes up to 76.9 in 2015. The similar EZ percentage drops from 70.2 to 68.8, but remains virtually there (69 in 2015). Unemployment (ages 15-74) in both the UK and EZ jumps in 2009 from 7.6 to 9.6, but then in the UK turns down to 5.9 while in EZ increases further to 10.9.
Let's go back to Brexit. The latest Eurobarometer surveys pointed to a growing concern about immigration and a decrease for unemployment in the UK, while in the EZ the two concerns were placed at the same level. Towards the end of May, in full referendum campaign, on British newspapers appear news that the flow of immigrants in the UK has almost doubled from 2012 to 1015, going from 175 thousand to 336 thousand. David Cameron obviously worries about it and commented: "We had a situation where for a few years the British economy has been the growing economy, the economy that creates jobs in the European Union and I think this is one of things that are behind these figures”, but, he added," this situation is beginning to change because the other European economies are beginning to grow”.
Clearly, for many British voters the interpretation was of this kind: in continental Europe there are policies that do not create jobs, so they come to us from continental and Eastern Europe, and there is little to trust the Cameron opinion that things will change. So better leave.
Theresa May, the new Tory leader, has astonished at the unusual phrases, for a conservative leader, pronounced at the time of her inaugural speech. Addressing the British people, she said that "the government I lead will be driven not by the interests of the privileged few, but by yours”. She has specified the statement with three examples: “that means fighting against the burning injustice that, if you’re born poor, you will die on average 9 years earlier than others. If you’re black, you’re treated more harshly by the criminal justice system than if you’re white. If you’re a white, working-class boy, you’re less likely than anybody else in Britain to go to university”.
The famous film director Ken Loach, historical opponent of Blair and Corbyn’s supporter, says that he does not believe in May. Very probably right, but it is a significant change of style with respect to Cameron.