- If I go quite quickly, if I'm going too quickly stick your hand up and say you're going too quickly. But I'll try and cover, basically these lessons. The lessons what we've learned about the process of leaving the European Union is lesson number one. What we've learned about trying to govern a divided country is lesson two. What we've learned about our system of governance is the third set of lessons, how our constitution works. What we've learned about trade. What we've learned about ourselves and at the end, I'll speculate very briefly about what might come next in this Brexit saga, because you'll be delighted to know that whilst Brexit is done, it is nowhere near over.(audience members laugh) So first and foremost, there were lots of claims that leaving the European Union will be very, very easy."The easiest trade deal in history" was one quote we heard. None of those claims were taken seriously by anyone who had the faintest inkling of how the European Union works. And indeed to be honest, the Brexit has had it right all along. It was the Euro skeptics back in the 1990s, who would say the European Union has wrongly inveigled itself into the nooks and crannies of national life. They were spot on, but because the European Union had done that, leaving it was always going to be a very, very messy, complicated, technical time-consuming business. Think about it, there were some really serious issues to be sorted out from the get-go. Money, we had to figure out how much we owed. How you dealt with the question of the rights of EU citizens here and of UK citizens there. Some questions haven't, actually, been settled as yet. Though, there was a deal and I'll come back to that. And of course, we had to figure out how we wanted to co-exist with the European Union into the future. So there was an awful lot to do and that was made even harder by Article 50. The infamous Article 50 that set out a ludicrous two-year timetable for getting all this sorted out, which was made even worse by the EU's insistence that the past had to be sorted out before the future. So the EU said you can't talk about a future trade deal, you have to talk about resolving the issues of the past. The EU position wasn't entirely fair, because having said you've got to deal solely with the past, they then spent most of the 18 months discussing the Northern Ireland protocol which was about the future. But no one accuses people of international negotiations of being consistent. You do what you need to do to get what you want. But Article 50 made what would've been a nightmare anyway, even more difficult. And in Article 50 you will see it talks about the constitutional processes in member states. There's a little hint of the fact that there are even more complicated issues apart from the negotiations themselves, which I'll come back to. Actually as it turns out, the EU and the UK were pretty damn efficient. They figured out citizens rights, pretty fast. It's a complicated settlement. It had to be, you're talking about 5 million people. And what they came up with won't be perfect and I'm sure we'll see court cases and you see headlines about people who feel they've being denied their rights and so on, but they came to an agreement. Money was even more striking. The UK, basically, caved on the money. After newspaper headlines intimating that this would be a deal breaker, the UK essentially agreed to what the European Union suggested. So those two big issues, they sort of underlined in a way how unpredictable the whole Brexit process was, because the things that most experts, myself included, were thinking, oh my God, this is going to be a nightmare, they managed to sort out. What, of course, most people failed to see coming was that Northern Ireland took up most of the negotiations and I'll come back to Northern Ireland in a bit more detail, a bit later. But sorting out the European Union in the negotiations was only part of the issue of Brexit. The other part of the issue of Brexit with getting ourselves ready to leave the European Union. And there's not a little irony in the fact that leaving an organization that had been accused by its critics of being overly bureaucratic was a process that ended up having 25,000 civil servants in this country working on it. There were a one point in early 2020, 25,000 civil servants whose job it was to deal with Brexit. The other thing about leaving the European Union that was slightly ironic is the fact that leaving this legalistic labyrinth required us to write a whole load of new laws. There were two issues we faced. First, if you're a member state of the European Union, there are certain things the European Union does for you. You can think about trade, you can think about immigration policy, for instance, and when we left we suddenly had this awful task of figuring out which bits of law we needed to write to give ourselves the power to do things. It turned out halfway through the process, there was no legal mechanism for the UK to impose sanctions on a third state, on a different state because that's something we did through the European Union. So there was hectic law writing and then there was an even bigger problem. There were pages and pages and pages of EU law that applied to us, EU regulations they're called, but weren't actually on the domestic statute book because they hadn't been incorporated into UK law. And so we passed this EU withdrawal bill, which basically meant literally thousands of EU rules were shifted from EU law into the body of domestic law. And it's worth saying, that happened without much at all in the way of parliamentary scrutiny and those things now sit on the statute books. So the whole thing was messy. You don't need telling this, you lived through it. It was messy. It was complicated. It was a nightmare for the politicians and civil servants involved in it. One of the implications of the messiness of the Brexit process, of course, was it put other would be emulators off. It was very striking during the Brexit process, how quickly the national front in France said, actually, you know what? We don't really want to leave the European Union, we just want to change it.(audience laughs) Because actually from the outside, this looked like a nightmare. And of course, if you are French and you're thinking of leaving the European Union, you've got the added complication of getting back your own currency at the same time as well, which would be even more messy than the Brexit process we went through. So that's number one, leaving is hard. Number two, the implications of what I've just said is even with the best prime minister in the world with the biggest majority we've ever heard of, Brexit would've been tough. Neither of those conditions helped. We're dealing with a prime minister who had her limitations that we're all aware of now governing for much of the time without a parliamentary majority. There were two contextual things, I think, that made Brexit hard domestically. The first was that Theresa May was a Remainer. And what that meant was she spent much of the first year in office desperately trying to prove her Brexit credentials to the real Brexiters in her party, which is why at her conference speech in October, 2016, she took such a hard line. She laid down those red lines about the European courts, about trade, about immigration and so on. And actually, much of the history of her premiership was of her unsuccessful efforts to row back from those red lines in the face of opposition from those Brexiters she'd initially tried to woo. The second contextual thing about Mrs. May that I think really mattered is she became prime minister without the full leadership contest process. Because you remember, she was basically elected unopposed because her main opponents pulled out. And what that meant was the candidates didn't have to lay out their visions of Brexit, argue about them and get their approval from both the members and the parliamentary party. If that had been the case, she would've enjoyed some legitimacy in saying, I won a contest based on this vision, so you lot are now honor-bound to support it. There was none of that. No one had signed off on her vision. The other contextual thing, which is absolutely crucial, is Brexit isn't a thing. All right, the referendum was binary. We stay in or we leave. The day after we left, we suddenly woke up to the fact what the hell does leave mean? There are all sorts of different ways in which we can leave the European Union. For economists this summarizes what is called the Condorcet paradox, which is when you have more than two choices, it is sometimes very, very hard for a majority to emerge in support of any of them. And I'll come back to that in a moment, because the fact that we had a slight majority for leave never meant we had a majority for any particular version of leave, because the British people and the British politicians split more than two ways. And so these divisions were there and they existed at every single level. They existed in the Cabinet, which you think back to the days of Theresa May the Cabinet leaked all the time certain information couldn't be shared. The Treasury's economic forecasts couldn't be given to the Cabinet in case it was leaked. So you had divisions at the very top of government. And if you want to sort of look at it comparatively, that vertical line, they represent the number of resignations from Cabinet. And you see that as a competition in terms of sheer rapidity, but Theresa May wins, hands down.(audience laughs) Okay. So you're dealing with a government which itself is very divided and under the government, you also have a political party that is very divided. I mean it's easy to criticize Mrs. May, and she was far from perfect, but it would've been a struggle for anyone to get coherence from a political party in parliament that consisted of Dominic Grieve and Mark Francois, where the dominant issue on the agenda was Brexit. So the parliamentary party was completely divided, which meant that party unity and party discipline went out of the window. And of course on the other side, you have a Labour Party that spent most of its time fighting its own leader. So those days when party leaders could count on the support of their troops, seemed to be a thing of the past. And then if you look at Parliament as a whole, there was an absence of a majority of there. Now you can take your pick about which culprit you want to finger as the person who, you know, failed us during the Brexit process. There are lots of potential culprits to choose from. One thing I would say, and one thing that is curious, is for all the talk about Brexit being the new division in British politics is the actual traditional left-right politics in the end triumphed. By the end of the Brexit process, by the end of her time in government, Mrs. May had negotiated a Brexit deal that didn't really differ in any substantive respect from what the Labour Party were demanding. There was a customs union of sorts. There was a kind of single market membership, certainly for goods, to prevent that border in Northern Ireland. There was the possibility of extending this via membership in EU agencies. That was, basically, what Jeremy Corbyn was calling for. And many people on Jeremy Corbyn's benches, if you think about those various MPs who came from leave supporting seats, who might not have liked Brexit but had promised to support Brexit, wanted a soft Brexit, you would've thought that many of those people might've backed Theresa May's deal, but in the end they didn't, and why didn't they? Because of politics. Because, ultimately, a Labour politician voting in favor of a conservative Brexit would've had a very, very hard time justifying themselves to their electorate and to their constituency parties. So the Labour Party failed to support a deal, which on the surface they could've supported. And what this leads to is Mrs. May's meaningful votes, so-called. So in her first meaningful vote, she has the biggest defeat a government has suffered in the House of Commons for a hundred years. A few weeks later in the second meaningful vote, which was an improvement, it was the fourth biggest government defeat in the era of universal suffrage because that Parliament simply could not get its act together to figure out what it wanted from Brexit. And one of the reasons why it couldn't figure out what it wanted for Brexit is you have polarization. One of the striking things that happens during the Brexit process is the people who favored a second referendum on the one hand and a no-deal Brexit on the other hand, did everything they could to pursue a scorched earth policy towards anything that smacked of compromise. People who wanted a second referendum would throw mud at people who wanted a Norway-style Brexit. People who wanted a no-deal Brexit would throw mud at people who were willing to compromise a little bit with the European Union to get any sort of deal. And what this meant was when it came to those infamous indicative votes, you remember the indicative votes we had? That is they. None of them, could muster a majority. Supporters of a second referendum, refused to vote for a customs union or a single market. Supporters of a no-deal Brexit refused to vote for any form of Brexit, apart from the one they wanted. And this polarization meant that Parliament was simply unable to decide what it wanted. Now, many people at the time were saying this shows how dysfunctional our Parliament was. Well maybe, but actually another way of looking at it is this illustrated how perfectly representative Parliament was of the people it governed, because we couldn't decide what we wanted either. I talked to you earlier about the Condorcet paradox. That is the Condorcet paradox. That is public opinion. There is no majority in public opinion for any Brexit option. So added to the complexity of the task itself, added to the problem of divisions in Parliament, there was the fact that in the country as a whole there was no Brexit option, whether it was remain or any variant of leave that could command over 50% support. And that made the process and the whole thing inherently unstable and, in part, was responsible for the situation that we had to live through for what seemed like an eternity, but was actually only about five years.(audience members laugh) The next thing that made this hard and the next lesson, I think, that we've learned about Brexit is God, we are a complicated country.(audience members laugh) And we're a complicated country not just in terms of the people in it, but we're a complicated country in terms of the system by which we're governed. And I said earlier, I'd come back to Northern Ireland. So one of the biggest sticking points in the negotiations and indeed now and if you've got questions about the Protocol and the row now, you can ask them at the end, was the issue of Northern Ireland. And the problem with Brexit is Brexit presented Northern Ireland,(audience laughs) it particularly presented Arlene Foster with a host of unpalatable choices, okay. Because the issue with Northern Ireland is summed up in this diagram. This is the so-called Northern Ireland Trilemma is if you want no Irish border, if you're leaving the single market and the customs union, you can't have a whole UK Brexit and no Irish border, okay. You could only have two out of those three at any given time. And that is the problem we're wrestling with, because the Conservative Party wanted to leave the single market and the customs union. They also wanted no Irish border. They also, as Theresa May said, wanted a whole UK Brexit because as she said, no UK prime minister can ever sign up to a deal which involves placing a border within the United Kingdom, okay. But she couldn't have all three. So in the end she watered down the top one. She signed up to the backstop, which meant that really we weren't leaving the single market and the customs union as completely as her party liked. What Boris Johnson has done is sacrificed the bottom left because what he's agreed to is a Brexit whereby Northern Ireland alone remains within part of the single market in order to prevent the need for that border between the north and the south of Ireland. And that is why we're having that fight over checks in the Irish Sea at the moment, because there is a regulatory border between Great Britain and Northern Ireland, because Northern Ireland is part of the single market for some things. And the European Union says if it's part of our market, we are going to check what comes into our market. We have the right to check things before they enter the single market. So that immediately creates a massive problem and that is why Northern Ireland dominated the talks to the extent it did. But, of course, you know it isn't only Northern Ireland that's complicated in our political system. I mean, Northern Ireland is the thing we talk about, but of course, Brexit is unsettled, a devolution settlement more generally. Why? Because that devolution settlement, even if we weren't fully consciously aware of it at the time, was based on the fact of EU membership. Being in the European Union meant Scotland could have different laws. But because they were in the single market and the customs union, we didn't notice because we were all bound by that overarching European Union law which meant that borders, essentially, became less important. On top of that because Scotland voted to remain, Brexit and the Brexit vote itself immediately caused tensions. And the UK government's approach to that tension in terms of both style and substance was combative. So in terms of style, this is the former Permanent Secretary at DExEU, a man who had many years experience of working on questions of devolution, who was appalled as he says here, by the way in which Number 10 dealt with the devolved governments. It didn't deal with them as if they were governments with their own legitimacy in their own right. So there was a stylistic era that served to ramp up feelings, particularly in Scotland but to some extent in Northern Ireland, and I'll come back again to Northern Ireland in a minute on public opinion. But secondly, the government wound people up with substance, too. The Internal Market Bill, which you've probably heard of at some point, is a bill that was put forward by the British government to prevent Brexit leading to the creation of the need for regulatory checks within the United Kingdom itself. Briefly put, if the Scots and the English now have different regulations for agricultural products, because we're not in the single market and under that blanket of EU laws anymore, someone's going to have to check those products. So the Internal Market Bill was a way of saying, actually, if any of the devolved governments accept something it's fine to sell it anywhere in the United Kingdom, regardless. So you can't keep English goods out of the Scottish market. You might say you've got higher standards, but it doesn't matter. Politically, this led to push back from the Scots and the Welch, both of their assemblies refused to give consent to the Internal Market Bill because they said it was a power grab by Westminster, taking away from them powers that had previously been devolved to them. Now, this goes by the name of muscular unionism. The UK government basically saying, okay, we're going to take charge of this and everyone will eventually love us'cause we're going to be great right. Now what you see in that, the dark blue line, is support for independence in Scotland, it's for a while at least you get an increase in support for independence in Scotland. What's happening in Scottish politics, briefly, is this. You've had a process whereby remain supporters, who might have voted against independence in 2014, have become so enraged by the process of Brexit and the way that the UK government has behaved that they've switched to independent supporters. The reason why that gap is closing, to a significant extent, is because the opposite process has also happened. That is to say, leave backers in Scotland. And I mean it's easy to say the Scots are pro-remain, but virtually precisely the same proportion of SMP voters voted leave, as the same as the proportion of Labour voters who voted leave. So there is a leave community there. And what happens is a number of people who backed leave in the EU Referendum have become so enraged by the way in which Scottish independence and EU membership have become twins, that they've switched sides in the Scottish independence debate. So this is where we are. Now, we shouldn't underestimate this, because if you think back to when the Scottish Referendum campaign started, independence was at 25%. So we've come a long, long way since 2012. But there still isn't a settled majority in Scotland that is clear in favor of independence. And one of the things to bear in mind when thinking about Scotland, which will be one of the big issues for the future, is the fact that Brexit actually, in some ways, makes the task of the SMP even harder. Why? Because since the United Kingdom has left the single market and the customs union, if Scotland becomes independent and votes to join the European Union there will, wait for it, have to be a border between Scotland and England.(audience laughs) We will have the same debate we've had about the Protocol and about Northern Ireland again, but about that border rather than the other one. And I suspect that at some level, that's quite a hard sell politically, to tell people that actually stuff is going to have to be checked on the M6 or wherever it is.(audience laughs) Well, precisely, I mean it's sort of kind of unthinkable. But that is the challenge facing the SMP at the moment, in the event that we have a referendum campaign, is that Brexit, if you like, has made the emotional case for independence stronger amongst some Scots, because it's like bloody English have dragged us out of Europe against our will. But it's made the practical case slightly more complicated. Scottish independence would've been far, far easier if both England and Scotland were members of the single market and the customs union. Scotland's not the only place where attitudes have shifted. One of the closely guarded secrets about Northern Ireland, where if you look at the bottom two lines, a majority of both Labour and Conservative MPs do not think that the Northern Ireland protocol is good for Northern Ireland. David Frost was fond of saying that,"The Northern Ireland Protocol is causing a crisis in Northern Ireland." But actually if you look at the top line, what you'll find is a majority of people in Northern Ireland do think that the Northern Ireland Protocol is a good thing for Northern Ireland. So the Northern Irish are getting on with it and their traders are adapting to the Protocol. You're finding a massive increase in north-south trade at the expense of east-west trade, okay. And it's not rocket science is it? If you make east-west trade more difficult and you keep north-south trade the same, what's going to happen? You don't have to be a trained economist to figure out that you're going to get some trade diversion, okay. So on the one hand in Northern Ireland itself, there's a relatively high level of satisfaction with the situation around the Protocol. One possible reason for that is this. These were the warning levels around fuel supplies back in September, October, whereas you remember, we were running out of petrol. Only part of the United Kingdom that at no point was running out of petrol was Northern Ireland, Northern Ireland is in the single market, okay. One of the interesting questions going forward, actually, is one of the ways it might be possible to ascertain what the impact of Brexit on the UK economy has been or on the GB economy has been, is to compare the GB economy with the Northern Ireland economy. Because the only difference between the two is that Northern Ireland remains within the single market, whereas GB does not. But all of this has had broader consequences because it means there's been a hemorrhaging of trust in the UK government in Northern Ireland, okay. And this will have implications, I'm not saying there's going to be a border poll tomorrow. I'm not even saying there's going to be a border poll, definitely. But as in so many other parts of our life, Brexit has shaken things up. It's shaken the kaleidoscope of our politics, if you like. And we don't yet know where those pieces are going to settle, but those pieces have been disturbed. And what that means is, at best, a period of uncertainty. Pre-2016, I never thought I'd stand up for pre-2016. I never thought I'd stand here. But I never thought I'd stand here and say, at the moment it looks like Sinn Fein will be the biggest party after the Stormont elections in May. And that has massive implications for the future of our union for obvious reasons. And the final thing about our constitution that Brexit has made us think about, you remember all these various newspaper headlines after the various court cases we've had, is the relationship between politics and law. Because one of the things the European Union did that we didn't really think about at the time was it provided us with a form, if you like, of quasi-constitutional law. We don't have a codified written constitution. So we don't have what other countries have where you have a document that says here are certain rights and those rights can't be tampered with by a simple majority in Parliament, because they're constitutional rights. You got that here as a member of the European Union, because some rights, environmental standards, workers' rights, were enshrined in EU law. And what that meant was a simple vote in Westminster couldn't overturn them. You needed to have a qualified majority of member states to overturn them. So certain things were in enshrined. All of a sudden now we've left the European Union, nothing is enshrined, okay. Now, there is scope and the need for a sensible debate about whether, and if so why, certain areas of life, whether it's human rights or environmental standards or workers' rights, should be beyond the reach of our democratically elected representatives. It's not for me, obvious, why certain bits of public policy shouldn't be amended by a simple majority in Parliament, whereas others should. But it is something we have to start thinking about because absent the European Union, we simply do not have the constitutional wherewithal to say, here are certain things we really shouldn't touch. Or here are certain things, if we're going to touch them, we need bigger majorities or different majorities or a different process. At the moment, Parliament can change any law it wants by virtue of a simple majority and that has fundamentally changed the nature of our system, the nature of the way we're governed and that has profound implications. And it worries me sometimes that, I mean so much has happened as I hope you're getting the idea about because of Brexit, that we haven't really begun to think through or debate so many important things that we need to rethink. So that is the constitution. Now, trade wasn't meant to be an issue. I'll let you soak that up, while I have a quick drink.(audience members laugh) As it turns out, that's not what happened. Matt is my go-to, 'cause he tends to be very, very funny.(audience laughs) We've been on a learning process, what on "The X Factor" they would call a journey when it comes to figuring out our relationship with trade and what trade means to us and it's not just us. I remember back in 2017 or 2018, and one of the things about COVID is my sense of time has completely gone. 2017 or 2018, I was at a meeting at the CBI where someone said, "All our CEOs are suddenly realizing that their supply chains are international." You know they'd never realized before that, actually, the key widget for their product comes from Belgium. And there was no need to know that before, because it didn't matter because the point of the single market and the customs union was that shouldn't matter. But of course, all of a sudden it's like, oh my God, where do we get widgets from or where do we sell widgets to? So all of us I think or one of the reasons, actually, why our reaction to COVID was pretty good economically and in terms of supply chains, was precisely because companies had got to grips with the nature of their supply chains when they were wrestling with the implications of Brexit. So there's a curious unintended consequence for you. But so we've all had to learn about trade, about what trade means and about what the European Union meant for trade. So let's think a little bit about what the economics of Brexit looked like and how the changes in trade that Brexit implies have impacted on us. This is some work done by a guy called John Springford at the Center for European Reform. And what this work consists of is the red line is what is called a doppelganger. You take a basket of currencies that historically, so look to the left, have basically performed like the UK economy has performed and you compare how the UK economy performs against that basket of currencies. So the gap at the end is what John has figured out is the difference between where we are now and where we would've been had we remained within the single market and the customs union. Some work by colleagues of mine that you can find on the UK In A Changing Europe website this week has shown the GDP by 2019 was about 2% lower than we would've expected it to be had the UK stayed in the single market and the customs union. The rub there is in 2019, the UK was still in the single market and the customs union. So that 2% of GDP was caused by factors such as the depreciation of the pound. Because gallingly, it transpires that the depreciation of the pound made exports more expensive, but didn't have a positive impact on imports. In parentheses, one of the reasons why there isn't that simple relationship between exchange rate and exports and imports is many of the things we export are made up of parts that we import, okay. So the bits that we import to make the stuff that we export have become more expensive. So actually, you're not going to get that benefit of those changing exchange rates. But the point is, as far as a lot of economists are concerned, even before we'd left the single market and the customs union, Brexit was having a negative impact. The other obvious reason why Brexit was having a negative impact was while there was uncertainty firms were, understandably enough, very reluctant to invest huge amounts of money in the UK economy. Because, actually, the terms via which we trade with our nearest and largest trading partner are something that most firms are quite interested in knowing before they commit millions of pounds to investment in plant. So that's the first thing. In terms of the future, this was our forecast of the impact of the Brexit deal that Boris Johnson signed. The numbers are big, but the numbers are big for a simple reason. I'll come back to some more explanation about those numbers in a minute, but basically Brexit is many things, but one of the things Brexit is, is a process of making trading with the European Union slower, more difficult and more expensive. And as I said, in the case of the east-west and north-south borders in Northern Ireland, if trade becomes harder, there's going to be less of it. If there's going to be less of it, that has an impact the top bars, on our domestic economy. Because trade impacts on how our domestic economy works. Now, if we want to dig into that a little bit, this was the Treasury forecast from 2017, and it looks a bit grubby because it's a photocopy of the thing that was leaked to BuzzFeed, because after the Treasury did these forecasts, they decided that no one should see them.(audience laughs) The negative bits are underneath the 0%, the negative impacts of Brexit. The main negative impact of Brexit are those bits, the diagonal blue lines, non-tariff barriers. That is to say administrative requirements, rules of origin requirements, paperwork, customers checks, all those sorts of things, not tariffs. But all that admin rubbish makes trade more expensive, makes it less efficient, makes it more costly. What the Trade and Cooperation Agreement that we signed with the European Union does is it removes tariffs, but tariffs are a relatively small part of the problem of trading from outside the European Union. So in a sense, it's the non-tariff barriers that are key to the problems that exporters and importers are facing. And actually, bear in mind, they're not facing all the problems they were going to face yet'cause the British government, only in July, will put in place the final checks that are needed on things coming from the European Union. The other interesting thing about this is if you look above that line there are two things. The black bit is what the Treasury thought we could gain via regulatory independence. Not in the European Union, we can tailor the regulations that govern our economy to our specific circumstances and that should make us more effective and more efficient, make our economy work better. Yes, but not by much. The other bit above the line is the Treasury's forecast of the positive impact of trade deals with every single one of those countries at the bottom, okay. So yes, we can sign trade deals. We've started to sign trade deals, but we shouldn't expect trade deals with countries at the other side of the world to come anywhere near compensating for the economic impact of making trade harder with your nearest neighbor. Why? Because trade depends on geography. I live in Oxford. We have a BMW factory in Oxford. We're not going to make cars that way with New Zealand, okay. Because of the simple fact of geography. So geography matters in trade and that is why all these trade deals that Liz Truss and now Anne-Marie Trevelyan might be signing have use, they're building good political relations, there are geopolitics at stake, the rise of China and all that. I'm not saying for a moment, it's not worth it. It absolutely is. Creating friendships and alliances around the world, because we live in a very uncertain and threatening world. But don't think about them in terms of making up economically for the economic impact of Brexit. And if you want to put the economic impact of Brexit into some course of context, actually, let's do this first. I've got that wrong, sorry. This is what's happening now. So the forecasts have being borne out, that you have EU in the red lines are EU exports and imports and you can already see that there is an impact on that EU trade because we are now implementing the Trade and Cooperation Agreement and that trade is harder than it was prior to the time when we were implementing that. I should say, the numbers are all a bit messy and fuzzy at the moment because of COVID. Trade isn't where it used to be because of COVID. Services trade in particular, if you want think about me, someone invites me to give a guest lecture and wants me to pay for it, I can't go or I couldn't go until recently, because I'd have to pay for 7,000 PCR tests. So I wouldn't go. But on top of that, because of the TCA, if I want to go and give a lecture and get paid for it in Belgium, I'm going to have to fill in immigration forms and I'm going to have to fill in all sorts of forms that I wouldn't have had to fill in before and that might just make me think, you know what? I'll stay here. It'll be absolutely fine. So, the figures are messy. But if you want to put it in some sort of context, this is the long-term forecast done by a friend of mine at the LSE, Thomas Sampson. So the green line is the economic impact of where we are now over the medium term. The blue line is the economic impact of COVID over the medium term. So whilst COVID might be drowning everything out here, over time the impact of Brexit is going to be two to three times that of COVID on the UK economy. So there are the things we've learnt about trade. The final set of lessons, and in a way the most important lessons, the most interesting lessons I think, is that Brexit has made us learn about ourselves. It's made us learn about our country in many, many different ways. Firstly, we've realized just how divided we are. But also we've realized that what divide us might not be what we thought divides us. The division of Brexit isn't a division between people who are left-wing and people who are right-wing, it is a division between people who are socially liberal and people who are socially conservative. It's about worldviews. It's about something quite intangible, in some ways. When survey firms try and tap into this they ask questions about the death penalty. They ask questions about gay rights, about gender equality, about whether you think there should be stricter discipline in schools. You know you can feel I think if you're British, but certainly you can feel it, the sorts of things we're trying to get at here. That there is a very, very high correlation between where you are on that social scale, social liberal or social conservative, and your propensity to vote for Brexit. One of the reasons why we now have to say things we never thought we'd have to say Labour-wing Kensington, Labour-wing Canterbury, the Conservatives-wing Wakefield, is because it's not about left and right anymore, it's about something else. And that something else is a fundamentally different division in our country. But if you want to know how amorphous this is and how cultural it is and how hard it is to pin down, one of the weird things about the Brexit division is one of the best predictors of how you voted in the referendum is whether or not you like "Mrs. Brown's Boys".(audience laughs) And again, I mean if you're British you can feel this and you know what I mean. You know that whole thing about snobbery and inverse snobbery. But you know "Mrs. Brown's Boys" tells you an awful lot about your worldview, okay. But this is, it's the third best predictor, basically,(audience laughs) for where you stand on the Brexit divide. So that's just to give you a flavor of the fact that this is actually very cultural. So the first thing is we're divided and we're divided by something that we didn't really realize divided us. But when you say it out loud, actually, it's like, yeah, you can see why you have these two worldviews that are quite inimical. It's quite hard to reconcile them. But there's another division we've learnt about too and it's a division that is economic rather than cultural. That is the map of leave versus remain. I don't know if you remember, but when Rory Stewart was standing to be mayor of London, he did a very bizarre interview. And one of the questions Rory was asked was what's your favorite pub, right? And Rory, being Rory and a little bit odd, said, "Pret."(audience laughs) Right. It's okay, so that's strange to start with, okay. And then something else strange happened that Rory was bombarded on Twitter, particularly from the Corbynite left by tweets accusing him of being an appalling, arrogant, liberal, metropolitan snob, because he liked Pret, which I didn't understand. And so I got the team in the office to look into this.(audience laughs) That's where the Prets are in the United Kingdom. You can actually, it turns out, do something very similar with density of fish and chip restaurants. There is a very strong correlation between the density of fish and chip restaurants and Brexit vote. But there's equally a very strong correlation between where Prets are and remain votes. You can understand from this why Rory wanted to be mayor of London, because in his constituency, in the Lake District, he had like a 20 hour walk to the nearest Pret.(audience laughs) Whereas, obviously, as mayor of London it would be relatively easy to get to his favorite pub. Anyway, there's a serious point behind this and the serious point behind this is that liberal metropolitan point, that Prets tend to spring up in prosperous areas. And if you look at this, there is a correlation between your the likelihood of voting leave and median income. That is to say, in general and on top of other factors, age and education clearly work fundamental to this, which takes us back to"Mrs. Brown's Boys", income was another predictor of how you voted in the Brexit referendum. And one of the interesting things about that referendum, I think, waking up on the 24th of June was this very profound sense, you know. I remember my sort of Oxford or London friends sort of saying, "Bloody hell, all those people up north have voted leave. Why? What's up with them?" You know people noticed the north. I remember friends of mine in Yorkshire saying that for weeks after the referendum you could barely move for tripping over BBC journalists who'd gone up there to figure out, you know. And there were all these sort of rye jokes on Facebook that David Attenborough would pop up in Hartlepool doing a natural history on the sex life of someone in the north.(audience laughs) You know, mating behavior of the Leaver. But there was this real sense that, actually, the country was awakened to bits of itself that you hadn't paid any attention to beforehand, okay. And one of the things we've come to realize is this is a very unequal country. It's a country where there are real, acute regional disparities. Look at that. It's a comparison between the scale of difference between the richest and poorest regions across countries. If you take the gap in productivity between the least productive part of the United Kingdom and the most productive part of the Kingdom, that gap is equivalent to the gap between the least and most productive parts of the Eurozone, okay. So we are sort of, in many ways, uniquely unequal. There was something real here. And for all the stuff I've been saying about social values and all that sort of thing, there was also another element to the referendum which it was a bit of a howl of protest. It was a howl of protest at a system that had left us with this. It was a howl of protest at a system, that partly because of the way our politics worked, the voices of people who didn't benefit from the status quo were being systematically overlooked. I remember a mate of mine at home, about halfway through the referendum campaign George Osborne gave a talk or a press conference or something at which he said,"I've got to warn people that if you vote for Brexit, the city of London will be damaged and house prices will go down." Well, my mate texted me from Wakefield and said has he changed sides, is he a Leaver now? Because for many people in the country, those are good things. You know London's getting punished, that's great. They've always had too much of everything. And I heard house prices are going down, which means I can actually get one. And that sort of summarized to me just how out of touch some of this debate was. The Brexit referendum, the case of David Cameron and George Osborne was why the hell would you vote against the status quo? And for many on the Brexit side, the counter argument was why the hell would you vote for it? And these were people who felt, think back 2015, 4 million people voted UKIP, they got one MP. Not much more than half as many voted for the SMP, if memory serves, and they got 50 odd MPs. So these were people who felt not just on the receiving end of economic policies that had left them systematically disadvantaged, but also in a position where their voices weren't being heard via the political system either. And that is one of the reasons, you know whatever you might think about Brexit and whatever I think the aggregate economics that I showed you earlier is absolutely true, but one of the things that has come of Brexit is we've learned about ourselves and seem at least to be talking about doing something about it. And so I mean I don't want to judge government too harshly over the last couple of years, because God knows they've had something else on their minds apart from dealing with regional inequality, we've had the pandemic. But do you really think it's possible that issues like leveling up or the just about managing or burning injustices would've figured in our political discourse to the extent they have had Remain won the EU referendum. I find it very, very hard to believe that they would've done. So in that sense at least, we've changed the way we think about ourselves. And this part of the learning experience, I'm convinced, has been a good and a salutary one. Because in a sense, it might be that our economy ends up being smaller than it would've been if we'd stayed in. But there's a bit of me, and this is a personal preference unlike the rest of the lecture, that thinks, okay, but what if it's less unequal than it would've been had we remained inside the European Union? I'm not saying that's going to be achieved and there's a lot to be desired about the leveling up non-white paper apart from anything else. But you know not much is being done yet. But we have changed as a people and we have changed as a people, you know sometimes you look in the mirror and it's a shock. Well, I don't know, it happens to me sometimes I look in the mirror and it's a shock. Well, as a country we experienced that horrible shock. So, now we get to the ropey bit where I really, I'm just going to make things up.(audience laughs) I mean the one thing you've learned about politics over the last five or six years is there's no point trying to predict anything because you know within 24 hours, you're going to look like an idiot. So here I go, I'm so glad this is being filmed.(audience laughs) We are divided. In case, you thought you'd wake up and it had all gone away. It hasn't. And let me say a quick word about this chart. So YouGov have done this tracker, was the decision to leave the European Union the right decision or the wrong decision, okay? And it's changed, that you know wrong is pulling ahead. Don't if you're a Remainer get too excited about this, because one of the reasons why wrong is pulling ahead is because of demographic churn. Very, very few people have changed their minds about Brexit, very few. But more Leave than Remain voters have passed away because of the age demographic of the vote and more young people have joined the electorate. And, of course, young people were disproportionately pro-remain. That's one of the reasons why you see the change in those things. But anyway, that division is still there. And in case there was any doubt, 62% of voters continue to hold a Brexit identity and think of themselves as Leaver or Remainer. More people in this country identify as a Leaver or as a Remainer than identify as Labour or Conservative. So the idea that now we've left, that division is simply going to disappear is for the birds. Different things trigger it. It might be taking the knee. It might be pulling down a statue. It might be immigration, but it's the same division. Might be the BBC, to take a pretty topical example. But you can see why the government plays to those things. Because, of course, Boris Johnson in December, 2019, put together a Leave coalition, 75% of Leave voters voted conservative in December, 2019. So, but, the one thing that is shifting is that more and more people now think that Brexit is being handled badly, okay. Again, this doesn't mean that more and more people think we should rejoin. I suspect if you took a focus group of people and said do you fancy having five years or 10 years of negotiations with the European Union about rejoining? They'd probably slap you, apart from anything else. People want this out of the way. They want it done. They want it over. They want to get on with their lives without COVID and without Brexit and let's not talk about them ever again, thank you very much. But, they look at the government and they think actually this is being handled quite badly. I should say, in parentheses, that they look at the EU and think they're handling it quite badly, too. It's not necessarily solely the fault of our government, but there is a change here in the sense that those numbers imply, to me at least, that the government can't count on Brexit as a go-to to rally the base, because the government's being seen as handling it badly. And if a government that told us two years ago they'd got Brexit done, keeps banging on about it, some of those people are going to start thinking, hang on a sec, isn't this gone and done? In October last year, so before partygate, for the first time since July, 2019 when he became Conservative Party Leader, more Leavers thought Boris Johnson was doing a bad job as prime minister than thought he was doing a good job as prime minister. So one way of looking at this is that competence and economic management and things like this are starting to shape people's view, the left-right stuff again, in a way that they didn't when we were in the heat of the Brexit process. And one possibility is this is, the Ipsos MORI Salience Index where they asked people what the biggest issues facing the country are. As we get towards Easter and the ending of the fuel price cap and the potential of 6% inflation. It is perfectly possible that the national economy becomes the most important issue in people's minds. Not COVID, not Brexit, but the national economy. At that point, it is conceivable at least that Brexit gets redefined. This partly depends on how clever the Labour Party is. But Brexit gets redefined not as a cultural issue, but as an economic one. Brexit becomes part of a suite of care, Starmer's attacks on the government for putting in place economic policies that have led to a cost of living crisis in the country. If that happens, then I think the Brexit debate can change quite fundamentally in nature and its impact on politics can change quite fundamentally in nature. Whatever happens, though, and I think if you think back to those slides about existing divisions in the UK public, the fact is and I'm sorry if this isn't what you want to hear, that one way or another and in a one guise or another, Brexit is going to continue to haunt our lives in practical terms and in political terms for many, many years to come. Thank you.(audience applauds)- I'm going to start with a question online that has got the most number of votes which is, what is the impact on our young people in not having unfettered access to work opportunities in European countries?- I think the question, in a sense, the question answers itself. It's closed off opportunities for our young people. We wait and see for what will happen with the so-called Turing scheme, which the government's brought in to replace Erasmus for university students. But I mean, it's mixed. People can still travel. You can still travel to European countries easily. So there's no problem about going on holiday. It's when you're going to do paid work that it becomes more difficult. And in that sense, yes, certain opportunities are not going to be there as easily as they were when we were a member state of the European Union. Equally, we can look at it the other way, because for me one of the things that's happening that is real cause for concern is the government announced that it would no longer accept EU identity cards for travelers coming from the EU here. Lots of people in the European Union only have identity cards and don't have passports, particularly young people. And what we're starting to see already is a massive drop-off in the number of school trips from EU member states to this country and I think that's a shame.- [Man] So much to talk about, about one of the things you said. With a positive view of things, which is the reason why I voted for Brexit, not anti but pro a number of things; the freedom, the replowing of the soil, if you like, that fertility. Where you said about the north and that imbalance, the scope, in many dynamics you could see that an organism is as strong as its weakest part. And if we've got a large part which is weak, then with a positive view, if that equality equals out then are there forecasts of what then that stronger overall organism, if you like, could go to? Because in theory, we're more capable then of higher and broader things longer term. Does that make sense?- Yeah, it does. But I'm not sure about economic forecasts per se, but I mean intuitively common sense tells you that if some of the areas in this country that aren't productive, where productivity rates are very low, that aren't economically successful, if we can tap into the talent there and make them economically successful, we will all benefit. I mean think about kids and education. You know your life chances are determined, to a degree that is scandalous in the 21st century, by where you're born in this country. If every kid had the opportunity to go and have a world-class education and to go to university, if they wanted and to achieve their full potential, the country as a whole would benefit. I mean the country would be a better country if all the best people could accomplish their potential. At the moment, because of the socioeconomic differences, that's not the case. Actually, what you said about the soil made me say one thing, the aggregates, I mean I'll stand by the aggregates I've given you in terms of economics. But there are some policy areas where we should absolutely be able to do things infinitely better out of the European Union than we could in it. And one area where we're doing it, I think at the moment, is agriculture where actually the new system of subsidizing agriculture which is based on providing public goods, like environmental goals, rather than on simply producing more and more, which is the EU incentive scheme, is far superior. So I wasn't trying to imply in any way that there aren't things that we could gain from. All I'm saying is in terms of the net economy don't expect it to make us more prosperous, but it might make us do certain things in certain areas better. And I hope, actually, on the leveling up, that is one of those areas.- Will the Northern Ireland Protocol survive?(audience laughs) Oh, it's a good question.- I mean I could just toss a coin. I mean at the best of times, it's hard to know and this really isn't the best of, we don't know who's going to be prime minister in two months time. And ultimately, the fate of the Northern Ireland Protocol depends on what the prime minister decides. And one of the reasons why I couldn't have answered that question in November or December was for everything that David Frost said, there was a sense that ultimately the prime minister would decide, Article 16 and suspend the thing or sign up to it with compromises. Boris Johnson needs to make his mind up. He's given very little sign. He said in Parliament today, in PMQs actually, that the EU was implementing the Protocol in an"insane and pettifogging way", I think were the words he used. So it shows that he's still willing to fight over this, but whether he ultimately will compromise, I just don't know. I'm not convinced he knows as yet, because I suspect he's got other stuff on his mind this evening than the Northern Ireland.(audience laughs) So I'm not sure he's giving it much time of day at the moment. My sense is it was always the case that people said, there's a deadline for getting this done, which is March. Because in March, the campaign starts for the Stormont elections in May. I suspect we're going to miss that deadline. And the sooner we miss that deadline, then actually everything gets put on hold until after those Stormont elections in May. Then if you end up with Sinn Fein as the biggest party, you've got a whole new political landscape to deal with. And then things get, if anything, slightly more difficult rather than less.- [Woman] You covered it slightly when you mentioned social issues. But what do you think was the impact that Brexit had or possibly still does have on xenophobia within the country?- On?- [Woman] Xenophobia.- Uh well, it's a really interesting question. There was definitely, I mean the police records seem to indicate that there was a spike in racist incidents after the referendum. And you know, I'm willing to believe that, that was the case. But if you look at the aggregate data of public opinion, what you found since the referendum is, one, immigration has dropped down the list of issues of salience to the British public in a way you could not believe. I mean just think about it, I mean we didn't think about it enough at the time. In 2017 and 2019 in those elections, we never ever mentioned immigration. When's that been true? Well not since 2001, probably. Immigration has always been in the top two or three issues. So that's the first thing that happened. The other thing that's happened that's probably more striking is since the referendum, the views of the British public on immigration have become more positive in terms of both its economic and its cultural impact. There's been a liberalization of UK public opinion on immigration since the referendum that's continued through COVID. There are other reasons related to COVID, I think, that might explain why it's being continuing or even strengthening during the pandemic. But this throws up an interesting question, doesn't it? On the surface, if you just look at it sort of simplistically, freedom of movement is weird. Freedom of movement is weird because it means that your government no longer controls who comes into your country, okay. And that, compared to other parts of the world, is a strange situation. It may be that, actually, because the UK government now controls who comes into this country, people are more relaxed about it. I'm not saying that's definitely true, but you have had a very, very clear and unambiguous shift in public attitudes to immigration since the referendum.- Well, Professor Menon, I'm sure we could go on all night for this fascinating debate, but I'm afraid we have to draw it to close. And we'd like to thank you very much for a tremendous lecture. Thank you.- Thank you very much.(audience applauds)