Brexit Dividend

The theory of economics from which we work is founded on a geographical model. We are particularly interested in margins, because that is where people are forced to make critical decisions, above all, whether or not to engage in economic activity.

It is at the margin that existing tax systems and other economic burdens have most effect. Locations that could support economic activity in the absence of tax become sub-marginal and fall into disuse when a burden of tax is imposed. This is most likely to happen in places distant from the main centres of population and with poor infrastructure. Thus the map of Brexiters and Bremainers is of particular interest as it is also a map of marginal locations.

Those parts of the country – and they include some areas of the South-East, which have not shared in the economic growth of the past thirty years – are the ones who voted for Brexit. Scotland and Northern Ireland voted to remain, presumably because they are recipients of EU funding on a large scale.

Thiis is not to suggest that EU membership is the cause of relative economic decline, or that the people in those areas were consciously voting for or against particular economic policies. What was happening was an expression of a generalised discontent with politics, with politicians, with the media and with the entire political process from which these people have been excluded for several decades. The picture is painted vividly in this piece called   “I walked from Liverpool to London”: Brexit was no surprise.

With the economic burdens imposed by the EU removed, Britain now has the freedom to grasp the opportunities that lie ahead. The politicians will probably fail the country yet again, but some of the obstacles would have been removed. We might have been the first to coin the term “Brexit Dividend.”