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The Great British Regression: Brexit and Inequality

New economic modelling on wages spells pain for British workers with the proportion of people earning National Minimum Wage likely to double to 14% under Theresa May’s Brexit Agreement. This will accelerate the nation’s decline into a low wage economy, with a hard Brexit turning the country into Minimum Wage Britain.

The findings are contained in a new report by CLASS, the Centre for Labour and Social Studies, which looks at the consequences on wages, investment and equality if the Government get a Brexit that takes Britain out of the customs union and single market. CLASS is urging the Government to change course and stop their race to the bottom on workers rights. The CLASS publication, called The Great British Regression: Brexit and Inequality, argues that Britain is in no shape to cope with a hard Brexit or no deal as the nation has not recovered from the financial crisis and continues to suffer from austerity.

Read the report here:

The essay collection features chapters by Dr Faiza Shaheen, Howard Reed, Dr Olivier Sykes, Dr Andreas Schulze-Bäing, Professor Özlem Onaran and Dr Sara Reis.

The report also finds that billions of pounds of investment have already been lost since the referendum, and that the Northern Powerhouse policy is threatened by the loss of EU funds.

Modelling by Landsman Economics shows that a 10 per cent fall in wages caused by Brexit would lead to a doubling of the proportion of workers earning the lowest legal wage from seven to 14 per cent.

The new report draws links between the financial impact of Brexit and its’ impact on people. And it warns that Theresa May is compromising the future health of Britain by leaving the customs union and take Britain backwards.

Other highlights include:

  • End of the Northern Powerhouse? How Brexit will cause a major reduction in infrastructure construction as a result of the loss of EU regional support. One third of the Northern Powerhouse fund comes straight from Europe. 
  • Inflation Nightmare: The spectre of rising inflation may become a reality as our import-dependent economy becomes less competitive.
  • Higher Brussels bill: Britain will pay out more in farm subsidies and fees to access EU institutions than we currently pay with the EU annual bill.

Dr Faiza Shaheen, Director of CLASS, said:

‘Theresa May's Brexit Withdrawal Agreement puts us on course for lower investment, fewer workers' rights, many more people on a minimum wage and a more divided Britain - economically and regionally. It also means less voice for UK citizens. It's hard to align these findings with Brexiteers' vision of "taking back control" or a prosperous UK.

‘Voting down the withdrawal agreement and rejecting the accompanying political declaration will send a signal that Parliament will not vote for a more unequal UK. But the job doesn't end there, we need a package of domestic policies to address the concerns that led to the Brexit vote.'

On investment, Professor Ozlem Onaran (University of Greenwich) says that billions have already been lost in private investment since the Brexit vote, and a fall in migration from the EU will make our ageing society older making our social care crisis worse.

On equality, Dr Sara Reis (Women’s Budget Group) writes that Brexit is sexist. Rising food prices under a hard Brexit will hit women harder, and that industrial sectors that rely most on women will be worst affected.

On regional inequality, Olivier Sykes and Andreas Schulze-Baing (University of Manchester) find that Britain’s poorest regions like Merseyside and Cornwall will lose valuable EU cash, making them poorer still.

Work areas: Europe, Inequality.