_The Wealth Report: Historian Niall Ferguson discusses the messy Brexit divorce

Full transcript:

AS: You also mentioned Brexit there, I think originally you were against it, but have since changed your mind.  I mean, and you’ve touched on it just now, but what do you think is the ultimate benefit going to be for the UK?  Do you have any confidence that the politicians can sort out a good Brexit for us and decent terms? 

NF:  Well, the most savage accusation that can be made against a public intellectual these days is to have changed his mind.  I actually didn’t change my mind on Brexit, I was against it, I argued on the remain side, but when it happened I said, ‘I can understand why people felt the way that they did about the EU.’  I said before the referendum, ‘This is like a divorce, and it’s going to cost a lot more and take a lot longer that you expect, just like a divorce.’  I have not changed my view on that, and I think that actually was prescient.  Now everybody talks about it’s being a divorce, I think I was one of the first people to point that analogy out in an article in The Spectator.  So, here we are in the still early stages of the divorce, most people expect it to take at least another couple of years, and then there will be maybe two years of transition, and what have we learned?  Well, we’ve learned that it’s extremely difficult to get divorced from the European Union and retain access to the single market, the biggest market for British trade, without accepting the full panoply of European regulation and free movement of people.  Now, since Brexit was supposed to be about taking back control and getting rid of Brussels’ regulations, and limiting immigration from the rest of the European Union, therefore logically we can’t stay in the single market.  

The cost of leaving the single market is really quite high, and it gets extremely tricky if part of Ireland, Northern Ireland, is going to do that, but the other part, the Republic of Ireland isn’t.  That one thorny issue of the Irish border almost derailed the final phase of the phase one negotiations between the UK and the EU.  There is worse still to come in the sense that this is a very complex thing.  You’ve got Britain leaving, not one, but 27 spouses, and they are negotiating in a pretty effective way, through Michel Barnier.  I’m afraid that the net result is bound to disappoint in one way or another.  Either, Britain is going to end up being de facto subject to European regulations, and perhaps even to the free movement of people, or Britain is going to have to pay quite a high price outside it.  It doesn’t seem to be me immediately obvious that Britain can do a bunch of better deals with other countries than the deals that it has with the European Union, within the single market.  It’s highly unlikely that in a short space of time, Britain can compensate for the hit to leaving the single market that is implied by hard Brexit.  So, my position hasn’t really changed, my attitude was, ‘Okay, you wanted it.  I get why you wanted it.  I understand why remain lost, but don’t be naive about what this divorce is going to cost, how long it’s going to take, and where you’ll end up.’  

One thing I learnt through divorce is that it’s very easy to think that all your problems have to do with the spouse that you’re divorcing, but there comes a moment when you realise that actually some of the problems were just all your very own.  You can’t divorce them anymore than you can divorce yourself.  Britain will find the same thing, when all is said and done, actually a relatively small percentage of Britain’s problems in the year 2016 could be attributed to Brussels.  The majority of Britain’s problems are British.  The low productivity of the British workforce, a bursitis problem, that is unquestionably nothing to do with Brussels whatever.  If anything, membership of the European Union somewhat improved Britain’s economic performance relative to the early 1970s.