Economic Theory

Brexit wasn’t worth it

In the run-up to the 2016 EU Referendum, people at the IEA and in its wider orbit were having lively arguments about the question of whether Brexit would help or hinder the cause of free-market liberalism.

It will help, said the IEA’s Brexiteers. The EU is a force for centralisation, protectionism, and corporatism. Outside of it, we will have a better chance of becoming more of a free-trade, free-enterprise economy.

That won’t happen, countered the IEA’s Brexit-sceptics. Britain’s home-grown statism is every bit as bad as anything the EU might come up with. Brexit would bring little to no policy improvements, so its only tangible result will be to make it harder to trade with our next-door neighbours.

(I won’t rehash those arguments here, but for those interested, see e.g. “Free-marketeers should support Britain’s membership of the EU” vs “Free-marketeers should oppose Britain’s membership of the EU”, “Hayek would have voted to remain” vs “Hayek would have been a Brexiteer”, “Why we must remain in the EU” vs “Let’s hear the positive economic case for Brexit”, “Why Britain must remain in the EU” vs “Why Britain must leave the EU”, “Four Free-Market Reasons to Remain in the EU” vs “The Economic Cost of EU Membership”, “Britain and the European Union – Better Off Out?”, and “Should supporters of free markets support Britain’s continuing membership of the EU?”.)

On an on-and-off basis, we have been having those discussions ever since (see e.g. “Why Brexit was a mistake, from a libertarian perspective” vs “The libertarian case for Brexit – restated”; “5th anniversary Brexit Special”), and unless we go all the way to being either Singapore-on-Thames or Caracas-on-Thames, they may never be entirely resolved. Eight years on, I would argue that it is quite clear that the Brexit-sceptics have been closer to the truth. But I accept that there is some ambiguity here (and I suspect that by the time you read this, Julian Jessop will already have started writing his next article, “In Defence of Brexit – 10 Reasons why Niemietz the Remoaner is wrong”).

But that is for another day. In this article, I am going to focus on something different. Thus far, our arguments about whether Brexit would help or hinder free-market liberalism were essentially arguments about the likely policy consequences of Brexit. Those who thought Brexit would help the cause of free-market liberalism thought that Brexit would lead to the adoption of free-market liberal policies. Those who thought Brexit would hinder the cause of free-market liberalism thought that it would not lead to the adoption of any such policies.

With the benefit of hindsight, I would, instead, argue that the main reason why Brexit has hurt free-market liberalism is not that it has led to the adoption of specific anti-liberal policies, but that it has changed the debate culture and the climate of opinion in Britain – and it has done so in a way which is detrimental to free-market liberalism.

One of the main social consequences of the Brexit vote has been the radicalisation of The Sensibles.

The Sensibles are a political tribe of sorts, except, they are defined by a vibe rather than a specific set of political beliefs. They have no strong convictions of their own. They base their politics on whatever is considered “respectable”, “reasonable”, “grown-up” and “nuanced” at a given time and place. They adopt whatever opinion is considered the smart, well-educated person’s opinion. They are essentially this video here, with some qualifications.

In our time, The Sensibles are invariably on the Left – although not in the sense of being Corbynite anti-capitalists. They are not ultra-woke either, although they would never criticise wokery, because smart, educated people don’t do that: that’s “Gammon”, and low-status.

The Sensibles have no strong loyalties to any political party: they may support Labour, or the Liberal Democrats, or the Greens, or one of the left-coded regionalist parties. They hate the Tory Party in its current form, but they love Rory Stewart, whom they used to see as “the one good Tory”, and they believe that there was a time when the party was more Sensible and Grown-Up. They are most easily defined by who and what they are against: Nigel Farage, Donald Trump, Boris Johnson, the Daily Mail, the Sun, populism, GB News, and Brexit. Of course Brexit. They really, really, really, really hate Brexit. And they cannot get over it.

Why is that a problem, from a classical liberal perspective?

You have probably detected from my slightly condescending tone that I don’t have a high opinion of The Sensibles, but while Classical Liberals and Sensibles are certainly not allies, there is no reason why they should be mortal enemies either. The Sensibles are sometimes right, if more by accident than sound reasoning. Conventional wisdoms can be right. Boring, predictable and unoriginal opinions can be right.

The problem is that for The Sensibles, everything that had the slightest association with Brexit became toxic in the years after the Referendum. And that includes free-market liberalism.

This is slightly ironic, because Brexit is very much not a free-market liberal project (which is exactly my problem with it). Of the 17.4 million who voted Leave 8 years ago, there are, at best, a few thousands who did so because they thought it would turn Britain into a free-trading, lightly-regulated, free-enterprise economy.

And yet: among the most prominent Brexiteers in the country, those with a pro-market outlook were very heavily overrepresented.

Steve Baker, Daniel Hannan, and Jacob Rees-Mogg were much more pro-market than the average Tory; Douglas Carswell was much more pro-market than the average Ukipper; and Gisela Stuart was much more pro-market than the average Labour voter. If there had been a pro-market mirror image of the Socialist Campaign Group – a Capitalist Campaign Group, so to speak – it would have had one or two lone-wolf Remainers, but the rest would all have been fanatically pro-Brexit. It was also true in the media and in the think tank sector that the pro-Brexit voices were much more free-market-oriented than 99% of the people who had voted for Brexit.

So you cannot even blame The Sensibles for thinking that there must be some intrinsic connection between Brexit and free-market economics. You can, of course, disagree with the free-market Brexiteers on Brexit, but still share their pro-market outlook on economics. (That is basically my own position.) But remember, The Sensibles are driven by vibes, not convictions. Once they feel that there is a link between Brexit and free-market economics, they feel obliged to reject free-market economics outright, across the board.

This tendency intensified greatly just after the second anniversary of the Referendum in 2018, when The Sensible stumbled across a version of the Tufton Street conspiracy theory (the idea that British democracy is somehow threatened by three or four small think tanks, where a bunch of nerds write policy papers and talk about them). This conspiracy theory is, of course, much older than Brexit. But until 2018, it was mostly the preserve of the far-left. It has since become the stuff that Sunday Times bestsellers are made of, and that hundreds of thousands – possibly millions – of people believe, completely unironically.

To avoid misunderstandings: I am not saying that there is a universe where Remain narrowly won on 23 June 2016, and where James O’Brien, Carol Vorderman and Alastair Campbell now happily attend IEA events once a month. There isn’t. But is there a universe where such people see us as just about within the boundaries of respectable opinion? Probably, yes.

There’s more. The Brexit years coincided with the Corbyn years, and one legacy of the Corbyn years is the wedge it has driven between the centre-Left and the socialist Left. Had it not been for Brexit, this would have been a good time for Classical Liberals to bury the hatchet with the centre-Left. We would not have become allies. We would still disagree on what the right size and the appropriate role of the state is. But there’s disagreement, and there’s disagreement. There’s “I think you’re wrong about this”, and there’s “You people are destroying the country”.

Classical Liberals are a small minority of the British adult population: 1213% at most, if you use a very broad definition. The vast majority of the population disagree with us on most things. If we want to gain influence, we need to strive for a situation in which people who don’t fully agree with us can at least accept that we have a point, and give us a fair hearing. Brexit has made that immeasurably harder, because it has created an intellectual climate in which a lot of people on the “reasonable”, “sensible” centre-Left see free-marketeers as their worst enemy. That is a cost of Brexit, too, and while it is not as tangible as OBR estimates, it is no less real.


Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

3 thoughts on “Brexit wasn’t worth it”

  1. Posted 24/06/2024 at 14:10 | Permalink

    The problem with this analysis is that it seems to assume – silently – that without Brexit, things would have gone on much as before. I don’t think this is necessarily right at all. Many other countries have seen the same Sensible radicalisation (which is, at base, a radicalisation of the media) against the centre-right parties, and, as a consequence, free markets.

    I think the deterioration you rightly identify is better explained by the changing economics of the media, than by specific political events.

  2. Posted 25/06/2024 at 16:04 | Permalink

    Trojans: IEA
    The Horse: Tory Party
    Brexit: A wooden-horse themed bonfire.

    Brexit destroyed the Tory Party. Hopefully forever. Meaning the IEA neo-liberal virus has lost its most effective vector into the body politic.

  3. Posted 27/06/2024 at 14:25 | Permalink

    There could have been a decent case for Brexit made around accepting sacrifices for the long term benefits of greater democratic accountability and potentially faster decision making. Had that realistic case been made by the Leave campaign I might have bought into it but of course I’d probably have been in the minority.

    So (with a few honourable exceptions) Leave campaigners insisted there would be no downsides, only enormous upsides including a turbocharged economy. Nobody of sound mind could have believed it all but Brexit supporters are just as susceptible to groupthink as everyone else and it became sacrilege amongst them to admit to any doubts.

    Reality can only be held at bay for so long and the unrealistically set expectations have come crashing down. The Tories will reap the harvest from this in next week’s vote. Right wing think tanks will then struggle to have any meaningful influence.

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