New World Wealth (NWW), a wealth intelligence group, argued in today’s CityAM that you could be wealthier to the tune of $30,000 (£21,000) in 4-5 years – if you vote to leave the EU. Brexiteers have spread the claim enthusiastically.
Does £21,000 sound nice? Yes. Does it sound realistic? No.
NWW say that after a Brexit, the UK could follow Australia and restrict immigration. They argue that as “high immigration levels bring down average wages”, lower immigration means a wealthier population.
This is a strong statement, but one that’s hard to back up. The Migration Observatory at the University of Oxford says “UK studies find that immigration has a small impact on average wages”.
The Centre for Economic Policy at the LSE concurred, saying “empirical research… finds little evidence of overall adverse effects of immigration on wages”.
Research commissioned by the Home Office also found “no strong evidence of large adverse effects of immigration on… wages of existing workers”.
While some studies show positive effects and some negative, none seem to show particularly large results. It’s difficult to see this making much of a difference to average earnings and hence to wealth.
Closer ties with the colonies?
NWW say that “a Brexit will result in greater ties with former English-speaking colonies such as Canada, USA, Australia, India and New Zealand, all of which have much stronger economies than EU countries”.
This is optimistic. There are good reasons to doubt we’d be able to negotiate as effectively or as quickly with these countries outside the EU as we could within. And the EU is the world’s largest single market, not a bunch of trade agreements. It’s highly unlikely that all these English-speaking countries would form a single market
A bonfire of regulations?
Finally, NWW argue that we’d be “free from EU regulations which restrict growth”. The opposite would probably be the case.
Quitting the EU wouldn’t mean we had no rules at all, merely that we’d have different rules. But accepting common EU regulations is a condition of full access to the single market. If we left, we would face greater barriers to trade – unless we chose to mimic EU regulation.
Edited by Michael Prest