Why David Ricardo Might Have Liked Regrexit

Brexit regret has grown. At 55%, a British majority thinks it was wrong to leave the European Union:

Brexit Regret

After voting to leave the EU during June 2016, the UK departed four years later. The decision affected trade, investment, and living standards. Unable to enjoy the benefits of freely moving goods and people among member countries, the UK economy became a G7 laggard.

These are the numbers from the House of Commons library:

During an interview this week, FT journalist Edward Luce said Brexit had caused the UK’s recent economic woes. Calling it an 8-year slow puncture, his examples ranged from food banks to libraries. Now, he told us, Great Britain has more food banks than McDonald’s outlets. It has one-third fewer libraries and a healthcare waitlist for operations that has tripled. In addition, one-third of British children have fallen below the national poverty line.

Meanwhile euronews reports that food costs soared by 25% (between January 2021 and March of this year) while business investment was 23% lower than it would have been because of new (non-tariff) trade barriers. Yes, domestic firms have benefited but with consumers paying the price:

Our Bottom Line: Comparative Advantage

Taking a huge leap, as economists, we can conclude with David Ricardo.

The economist who first explained comparative advantage, David Ricardo (1772-1823) said each nation should make the goods and services for which it has the lower opportunity cost and import what it does not produce. Because of those imports, consumers would enjoy lower prices and more variety. Benefitting also, exporters have larger markets that supported the efficiencies of economies of scale.

By departing from the EU, the UK was less able to benefit from comparative advantage.

My sources and more: Thanks to FT journalist Ed Luce  (23 minutes into podcast) for inspiring today’s post. Then, more facts about Brexit came from euronews and the  Centre for Economic Performance. As for the future, The Economist had some insight as well as this LSE blog. But perhaps, the best place for UK statistics is the House of Commons Library.