- Samuel Tombs / Pantheon
- Pantheon Macroeconomics’ Samuel Tombs argues that Britain won’t actually end up leaving the EU.
- He believes a transition deal will be agreed and implemented, but once the UK comes to the end of the transition period, Britain will stay in the bloc.
- That’s because Brexit will be so bad for the UK that no politician will be willing to stake their career on its implementation.
- Tombs is known for correctly calling the result of June’s general election when most commentators failed to do so.
LONDON – Samuel Tombs, an economist renowned for correctly predicting the result of June’s general election, has a fresh prediction: Brexit isn’t actually going to happen.
Writing in a note circulated to clients of Pantheon Macroeconomics on Sunday evening, Tombs – Pantheon’s chief UK economist – argued that Brexit will be so damaging to Britain’s economy in the short term that no politician will feel comfortable actually pulling the UK out of the bloc when push comes to shove, both for the sake of their own reputations, and the UK’s economic health.
Tombs writes that he believes the UK and EU will eventually agree to a transition deal to smooth Britain’s passage out of the EU, but once Britain reaches the intended end of the transition period, it will then stay in the EU.
“A transition deal-which keeps the U.K. inside the single market and customs union but gives it no say over its rules-is the only viable outcome in 2019,” Tombs said.
“The U.K. likely will go into a transition deal intending it to last for only two years, but we see a high chance of it becoming permanent.”
Here’s what Tombs has to say in a little more detail (emphasis ours):
“The key issue is that leaving the single market would entail short-term economic pain in return for the possibility of long-term gain, in the form of closer ties with fast-growing emerging market economies. This sequencing of the costs and benefits means Brexit always will be unpalatable for any politician, given their myopia. It will be particularly unattractive for the Conservatives to implement Brexit in 2021, one year before the deadline for the next election.”
Along with the fact Brexit will be unpalatable for any prime minister to implement when the transition period ends, Tombs points to data showing that support for a harder version of Brexit is falling.
“Public enthusiasm for a clean break from the EU has ebbed,” he writes, citing a YouGov poll that found 46% of people now think the UK was wrong to vote to leave, compared to just 42% who think the opposite. Here’s the chart:
- Pantheon Macroeconomics
Tombs also notes that one of the biggest drivers of the Leave vote – immigration – is fading in importance in the eyes of the public.
“Pressure on the government to leave the EU in order to reduce immigration also is fading. Official figures last week showed that net migration fell to 230,000 in the year ending June 2017, from 336,000 in the previous year,” he said.
“In addition, the proportion of people saying that controlling immigration should be the government’s priority has declined to just 11%, less than half the level at the time of Brexit vote, when it was voters’ top concern.”
In short: “No politician will ever implement Brexit, as the costs are upfront, but the potential benefits are far ahead.”
Tombs’ prediction about Brexit may seem outlandish, but given his track record, it is definitely one to keep an eye on.
He is known for his bold calls on major UK political issues, having correctly argued long before June’s general election that the Conservative Party would fail to win a majority in the House of Commons.
At the time, the vast majority of commentators, as well as the polls, were predicting that Theresa May’s party would increase their majority significantly.
Tombs, however, pointed to a chart showing the relationship between consumer confidence and the size of a UK government’s majority in the House of Commons after a general election.
He predicted “only a slender Tory win,” noting that low consumer confidence tends to correlate with governments losing their majorities. That prediction is basically exactly what transpired in the election.