A Short History of Brexit by Kevin O'Rourke

Author:Kevin O'Rourke
Language: eng
Format: epub
ISBN: 9780241398333
Publisher: Penguin Books Ltd
Published: 2019-01-30T16:00:00+00:00

Austerity

If globalization is hurting particular regions in the West, and causing voters to express their frustration by voting for populist parties or causes, then the question arises as to what can be done to prevent this. The traditional answer is that the government has an important role to play by providing safety nets for individuals, families and regions. The evidence suggests that governments can make a difference, and that there is nothing inevitable about growing inequality in a globalizing world. This is an important point to stress. In many continental European countries states have been far more protective of workers than in the US or UK, and this has mattered for outcomes. In France, for example, Piketty, Saez and Zucman estimate that the incomes of the poorest 50 per cent of the population have increased by 32 per cent since 1980, a sharp contrast with the situation in the United States described earlier.

One of the problems in the UK was that local communities were left to cope with the consequences of globalization with much less help from the government. As already mentioned, Cameron and Osborne imposed a radical austerity programme on the British economy, and their aim was not just to borrow less: their stated goal was to shrink the size of the state. One of the most comprehensive studies of the referendum has found extensive evidence that the Brexit vote was related to austerity and the poor provision of public services. Furthermore, austerity was much more important in driving the Brexit vote than immigration from Eastern Europe: while even a very large reduction in the inflow of immigrants would have been insufficient to overturn the result, a modest reduction in austerity could have sufficed to produce a different outcome.21

A comprehensive and careful study by Thiemo Fetzer documents the austerity connection in even greater detail. His conclusions are striking:

Austerity-induced welfare reforms are a strong driving factor behind the growing support for the populist UKIP party … contributed to the development of broader anti-establishment preferences and are strongly associated with popular support for Leave. The results suggest that the EU referendum either may not have taken place, or … could have resulted in a victory for Remain, had it not been for austerity.

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