The Farage Tax: What The UK Pays For One Man's Ego

GDP down, investment down, wages down - but Farage’s influence? Higher than ever

One of the consequences of disengaging with politics in the UK for a week or two is that you feel like you’ve fallen woefully behind – things move fast in this country, and the news cycle around politics is utterly unforgiving.

That’s a bad consequence.

A good consequence, on the other hand, is that when you do re-engage (with your marigolds firmly on and safety goggles in place, because it is a mess), you tend to realise that nothing has changed.

The sideshow that has become our political world remains as sideshowish as ever, the noisiest people have remained incessantly loud and Nigel Farage, bless his presumably Union Jack socks, is still wandering around as though he owns the spotlight - which he may just well do when we consider that he seems to be constantly treated as though he’s a wise elder statesman by vast swathes of our media.

While this has all been playing out though, last month a report made its way into the world which discusses that ever-present elephant that’s sitting in every room where political discourse happens - Brexit.

If only “Bollocks to Brexit” had counted as official guidance in 2016 - Photo by Nik on Unsplash

The report has come from the National Bureau of Economic Research - one of the most prestigious economic research bodies in the world. The report itself is the academic equivalent of an 83-page roasting session that confirms with granular, empirical and devastating elegance that Brexit has turned out exactly as badly as the experts warned - and in some respects, has been even worse.

Which, very incidentally, should make things rather… uncomfortable for our dear Mr Farage, considering that Brexit was ultimately the single big idea he has ever had.

A bit of context would be helpful though when it comes to the NBER, because while the name might sound dry and completely unthreatening, it really, really is not. The NBER, based in the United States is, in effect, the Champions League of economic research which has been doing its thing since 1920 - it is the organisation where Nobel Prize winners send their papers for peer review.

When this organisation publishes something, central banks read it and take notice, treasury departments give it their rapt attention and people who have jobs that involve regulating trillions of dollars and pounds give it the credence it deserves. It makes organisations like the Institute for Economic Affairs and the Adam Smith Institute look exactly like the joke outfits that they are.

It is, in short, a Very Serious Institution whose working papers routinely decide the fate of currencies around the world - so when they decide to take a calm, sober evidence-heavy look at the impact of Brexit nine years after the referendum and five years after the UK actually left the EU, it was always going to matter.

And what was the NBER’s conclusion on the matter?

In a brief summary, it would read “Oh. Dear. God.”

More formally and with technical detail?

• GDP per capita is now 6 - 8% lower than it would have been had we stayed in the EU.

• Business investment is 12 - 18% lower.

• Labour productivity is 3 - 4% lower.

• Employment is 3 - 4% lower.

• Trade intensity has gone sharply down.

• Thousands of exporters were completely wiped out.

• Consumer prices have increased on the back of new barriers.

The report now gives us one of our strongest indications to date that not only were the experts right when they said that leaving the European Union would completely hobble us, but that they were slightly too optimistic in their outlooks.

Most importantly and saliently to our current conversations in the UK though is that all of this - every single job not created, every investment withheld, every percentage point sliced off of the country’s GDP, every food bill that’s been nudged upwards - stems from the single policy that Nigel Farage spent half his life evangelising.

Which is why I suggest that we should all start changing our language around this, and start referring to what much of the economic mess we find ourselves in really is - the Farage Tax.

The silent surcharge that every person in this country now pays - not because it was voted for in parliament, or because HMRC needed it, but because one man with a pint in one hand and a half a fag in another told this country that “sovereignty” would make us all richer, handsomer, and cleverer, before he closed himself up in his GB News dressing room and left the nation’s productivity to someone else to slide into a ditch.

The economic damage described by the NBER really is no mean thing - a 4 - 8% reduction in GDP is the equivalent of the entire country walking around with sandbags tied to its ankles. It translates to lower growth, lower wages, weaker public services and higher borrowing costs, and is pretty much one of the biggest reasons why Rachel Reeves now looks like she’s trying to perform CPR on a stone in her attempts to revive the economy.

And yet, none of this has significantly touched Farage - since the General Election last year, all we’ve seen is him and his band of grievance merchants going from strength to strength. He is front and centre wherever you look - commentators ask his views on fiscal discipline, migration, crime, the Black Death, the nature of truth - think of a subject, and there will be a reporter somewhere asking him about it.

Political voices speak Reform UK now as a political force while politicians now treat him like an inevitable force, all while the NBER stands in the corner holding a clipboard full of data that shows that Farage’s one major contribution to national life has been about as beneficial as a tapeworm infestation.

A particularly delightful detail from the Brexit Autopsy done by the NBER was the clarity in which they rendered the timeline. Economists initially expected the shocks they described to hit quickly - but that didn’t happen. Instead, the impacts happened gradually - first uncertainty froze investment, then the new trade barriers started slowly strangling competitiveness, which in turn led to productivity falling ever further behind our peer countries.

By this year, the economic divergence that we’ve seen in the UK from our European neighbours has become so large that you could see it from space - or indeed from the International Monetary Fund, which has also revised its models of the UK to now accommodate the sheer scale of the underperformance.

Mention any of this to Farage and his followers though, and you’re met with excuse after excuse after excuse.

Brexit didn’t fail, they’ll say - the elites sabotaged it. The Conservatives botched it. Brussels tricked us. The EU “punished” us for leaving. The civil service betrayed us. Gordon Brown may have done something. The justifications are manifold and completely unhinged.

Except you don’t get to crash the plan and then blame the airport signage - especially not when an organisation as heavyweight as the NBER has just published a multi-year, multi-method study showing that the crash wasn’t caused by turbulence, sabotage or an act of God, but a failure of engineering combined with a pilot flapping his arms and shouting incoherently about sovereignty.

The genuinely hazardous bit of this for all of us is that none of this so far really matters - because Farage doesn’t need Brexit to have worked. He doesn’t need growth charts, positive forecasts, GDP lines or the lived reality of millions of people living in this country to align with his promises. His entire political existence depends on something far more potent than actual impacts or results - it depends on the vacuum created when no one in mainstream politics will say explicitly and frankly that he was wrong.

I will of course acknowledge that the silence isn’t total - in the past week we’ve had David Lammy making sensible noises about the benefits of rejoining the customs union, and even Rachel Reeves and Keir Starmer have been acknowledging that Brexit hasn’t been the panacea that was promised in the lead up to last month’s budget.

These all still fall short, however - they are nowhere near the full-throated, unequivocal, the emperor-is-stark-bollocks-naked statements that we now need. They are still careful, heavily caveated acknowledgements whispered into a political culture that is still terrified of upsetting voters who have, for the most part, already changed their minds with large numbers now living in a state of Bregret.

Which is exactly why Farage is still floating around - because the greatest political gift anyone can give to him is the space that’s created by not attributing the negative impacts of his project in any way or form to him. If the Labour Party and the Conservatives keep treating Brexit like an heirloom too delicate and fragile to handle, Farage gets to keep insisting that its abject failure is down to everyone except him - the bureaucrats, the elites, the civil service, the french, the weather, the moon cycle and any number of other red herrings he can conjure up.

The NBER’s intervention on the subject of Brexit presents an opportunity for the government - it gives them a massive old stick with which they can whack Farage on the head. A stick that shows here is the damage, the timeline and the cause, all of which cannot be attributed to conspiracy, cosmic misfortune or remainers blocking the path to sovereignty. It shows that the negative outcomes we’ve seen in this country come directly from a policy that was sold through fantasy, slogans and blatant lies told by a band of people who did not know what they were doing.

Once that message becomes clear and salient - once you repeat it publicly, loudly and plainly - the entire Farage mythology will collapse in on itself, and the man who is in part responsible for the hobbling of our economy can no longer pose as the only one who can fix it. The political media’s favourite pub-philosopher will finally become exactly what he actually is - a bloke who had one idea which failed spectacularly and cost us all thousands of pounds.

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