Dismore questions Mayor over the impact of Brexit on Londoners’ living standards
At today’s Mayor’s Question Time, Andrew Dismore AM, Labour London Assembly Member for Barnet and Camden, questioned the Mayor Sadiq Khan over the impact of Brexit on Londoners’ living standards and the economic prospects for Londoners of a ‘no deal’ Brexit.
Mr Dismore said:
‘Would you agree that Brexit intensified austerity in London and led to a decline in living standards for Londoners?
‘Analysis has found that household incomes in the UK, including Londoners, are around £1,500 a year lower than predicted before the EU referendum in 2016 with the UK having experienced the sharpest income growth slowdown of any economy for which the OECD publish data. The Resolution Foundation has also shown how the UK has gone from one of the fastest growing economies to the slowest, post referendum. How damaging would a no-deal Brexit, being advocated by both potential next Conservative Party leaders and thus Prime Minister, be to those Londoners who have already seen rising costs without the same rise in pay?
‘With the Office for Budget Responsibility today predicting a ‘no deal’ Brexit will push the UK into recession next year, would you agree that the Government must secure a deal that works for London to avoid wrecking our economy; or revoke Article 50 if they cannot do that. Should we not remain in the single market and the customs union as this is what businesses in London want in order to keep bureaucracy to a minimum and have access to skills. A failure to secure a good deal in negotiations with the EU would deal a hammer blow to London’s economy, hitting the poorest and most vulnerable the hardest, wouldn’t it?’
The Mayor said that the Resolution Foundation had found that over the last 2 years, families have suffered a living standards stagnation worse that that of the recession in the early 1990’s. He said that he was in favour of optimism but that it had to be based on evidence. He didn’t see the evidence of how ‘no deal’ benefitted the economy, given the clear danger it presented to the NHS, construction sector and labour market.
He said that even assuming that Boris Johnson was a good negotiator, he had a choice about whether to work towards an arbitrary deadline of October 31st, when Parliament will be in recess and the EU will not be around to negotiate. Or he can avoid panic by revoking Article 50, give himself time to work out what he wants to do, re-serve Article 50 and negotiate a better deal.
After MQT Mr Dismore added:
‘The risks to London’s economy (and thus to the rest of the country which is dependent on London’s tax surplus) of a ‘no deal’ Brexit is becoming ever more serious, particularly in light of the Conservative leadership contest, where the two candidates are in a bidding war against each other as to their willingness to leave the EU without a deal. This is the height of iresponsibility, and the ones who will suffer most are the least well off, both in London and in the rest of the country.’
Notes for editors
- Office of Budget Responsibility Financial Risk Report is available here.
- The UK had been due to leave the EU on 29 March, but the deadline was pushed back to 31 October after Parliament was unable to agree a way forward. Since then, a new Prime Minister is due to be announced on the 23 July.
- A ‘no deal’ scenario will significantly change how trade is undertaken, financial and business services are provided and the framework in which sectors such as pharmaceutical and aviation are regulated. For example:
- WTO rules would apply. Whilst the UK would be free to sign trade agreements around the world there are no guarantees on what tariffs would apply to goods exported from the UK, including to EU member states ;
- Businesses would lose their passporting rights, which allow them to sell their services across the EU without having to obtain licenses in each individual country. Financial services would be particularly vulnerable;
- UK membership of a number of regulatory agencies would cease overnight, and alternative arrangements would need to be put in place, potentially requiring a protracted process of retraining and recruitment.
- A report by academics at the UK in a Changing Europe found that most forms of Brexit will worsen the country’s finances and reduce space for new initiatives to address child poverty, social care and left-behind communities that some argue drove the Brexit vote. They found a positive outcome depended on politicians being able to move on from the Brexit impasse and focus on longer-term challenges including productivity, regional imbalances and democratic reform. It concluded that “Any savings would certainly be far outweighed by the fiscal costs of a disruptive no deal,” it said, concluding that the impact of Brexit on the economy was currently “negative” and the outlook was also “negative”.
- The Resolution Foundation found that household incomes are around £1,500 year lower today than they were expected to be before the Brexit referendum – with the UK having experienced the sharpest income growth slowdown of any economy for which the OECD publish data. Their analysis also shows that our underperformance since 2016 is largely a UK-specific issue, with global growth over the whole period actually outperforming pre-referendum expectations. The UK has gone from being one of the fastest growing economies in the G7 pre-referendum, to one of the slowest. It also demonstrates that the UK’s strong performance on employment since the referendum has been outweighed by higher inflation and weaker nominal pay growth. Had household incomes grown in line with other advanced economies they would have been £2,000 higher in 2017.
 Mayor of London press release, (11.01.2018), Mayor warns hard Brexit could lead to ‘lost decade’ of growth and employment, [accessed 11.07.2019]
 The Guardian, (24.06.2019), UK finances forecast to suffer under most forms of Brexit, [accessed 11.07.2019]
 Resolution Foundation, (11.02.2019), Counting the cost: UK living standards since the 2016 referendum, [accessed 11.07.2019]