The aftermath of the Brexit vote – the verdict from a derided expert

LSE British Politics and Policy blog:

There are multiple reasons for the Brexit vote, but by far the most important one can be summarised in a single word: immigration. In the last few weeks before the vote, the Leave campaign was ruthless in focusing on our fears of foreigners. Sadly, with the exception of London, this has been shown time and time again to be a great vote winner all over the world.

The British people have suffered tremendously since the financial crisis. The real wages of the average person fell by about 10 per cent between 2007 and 2015. This is not about inequality – poor, middle and rich have all lost out. It has been the longest sustained fall in average pay since the Great Depression and it has made people very angry with the establishment – and rightly so. As LSE’s Professor Stephen Machin, the new Director of the Centre for Economic Performance has shown, the areas with the biggest falls in average wages were the places most likely to vote for Brexit.

These wage falls and poor job prospects have nothing to do with immigration and everything to do with the financial crisis and slow recovery. But because immigration tripled since 2004, lots of people know of a friend or family member going for a job and a European migrant getting it. So it is easy to point a finger at foreigners as the cause of labour market problems. This is the ‘lump of labour fallacy’ in action – the false idea that there is only a fixed number of jobs to go around.

We have also been living through a period of sustained austerity with public services under severe pressure. People often find it hard to get a place in a good school for their kids or a doctor’s appointment. Since immigrants are also using public services, it is tempting to blame them for being ahead in the queue. Again, this is completely wrong as immigrants pay more in taxes than they take out in welfare, so they are on net subsidising public services for the UK-born. The fact that the government has chosen to use the fiscal benefits from immigration to pay down the budget deficit is hardly the fault of immigrants. But it is difficult for people to see this benefit. What is visible is competition for constrained public services, just like competition for jobs.

The stigmatisation of foreigners as a cause of our economic problems plays to deeply-based cultural fears. This is not simply bigotry, although some of it is. The anti-immigrant feeling would be there even if wages hadn’t fallen and public spending hadn’t been suffering years of austerity. But these real pressures helped lend credibility to the complaints. After all, what else is immigration but globalisation made flesh?