Brexit is direct result of austerity and cuts like bedroom tax, resear…


As chancellor, George Osborne was one of those in government who was most opposed to Brexit and who campaigned most aggressively for a remain vote in the EU referendum in 2016. But he was also the prime architect of the coalition government’s austerity programme and new research from the University of Warwick suggests that Osborne’s austerity policies directly led to Britain voting to leave the EU.

The report has been written by Thiemo Fetzer, associate professor in economics at the university. The full 100-page document is here (pdf).

Thiemo Fetzer

Did Austerity Cause Brexit?… Yes, suggests the new @cage_warwick working paper. @warwickecon @D_Blanchflower @DennisNovy @essobecker @cp_roth @jondequidt @rodrikdani @MEDevEcon — find the paper here

July 24, 2018

Here are some of the key extracts. This is from the introduction.

The fiscal contraction brought about by the Conservative-led coalition government starting 2010 was sizable: aggregate real government spending on welfare and social protection decreased by around 16% per capita. At the district-level, which administer most welfare programs, spending per person fell by 23.4% in real terms between 2010 and 2015, varying dramatically across districts, ranging from 46.3% to 6.2% with the sharpest cuts in the poorest areas. Using data from government estimates on the simulated intensity of specific welfare cuts across districts, I show that support for Ukip started to grow in areas with significant exposure to specific benefit cuts, after these became effective …

The austerity-induced increase in support for Ukip is sizable and suggests that the tight 2016 EU referendum result (leave won by a margin of 3.5 percentage points) could have well resulted in a victory for remain, had it not been for austerity. The point estimates suggest that in districts that received the average austerity shock, Ukip vote shares were, on average, 3.58 percentage points higher in the 2014 European elections or even 11.62 percentage points higher in the most recent local elections prior to the referendum. Due to the tight link between Ukip vote shares and an area’s support for leave, simple back of the envelope calculations suggest that leave support in 2016 could have been up to 9.51 percentage points lower and thus, could have swung the referendum in favour of remain.

And this is from the conclusion.

This paper presents novel and comprehensive evidence suggesting that austerity induced welfare reforms brought about by the Conservative-led coalition government from late 2010 onwards are key to understanding Brexit. Austerity-induced welfare reforms are a strong driving factor behind the growing support for the populist Ukip party in the wake of the EU referendum, contributed to the development of broader anti-establishment preferences and are strongly associated with popular support for Leave. The results suggest that the EU referendum either may not have taken place, or, as a back of the envelope calculations suggests, could have resulted in a victory for remain, had it not been for austerity.

Researchers have made a similar argument before (including in this paper, co-authored by Fetzer.) But the new study is much more comprehensive, because it includes evidence from a huge Understanding Society household panel linking exposure to benefits cuts with rising support for Ukip. As Fetzer explains in a blog summarising his paper, the bedroom tax was one factor.

Individuals who were exposed to a set of welfare reforms shift to Ukip once they had experienced the benefit cut. One example of a reform studied is the so-called “bedroom tax”. The results suggest that households exposed to this tax shifted towards supporting Ukip, and experienced economic grievances as they fell behind with their rent payments due to the cut. Indeed, dissatisfaction with political institutions as a whole increased following such cuts, with affected individuals being more likely to think that their vote is “unlikely to make a difference” and that “public officials do not care” about them. In other words, by curtailing the welfare state, austerity has likely activated a broad range of existing economic grievances that have developed over a long period.

These charts, from the paper, show the correlation between exposure to benefit cuts and rising support for Ukip.

Correlation between exposure to benefit cuts and rising support for Ukip

Correlation between exposure to benefit cuts and rising support for Ukip Photograph: University of Warwick

All of which is worth flagging up today because, frankly, there is not a lot else on at Westminster. Dominic Raab, the Brexit secretary, is on a visit to Paris, and Gavin Williamson, the defence secretary, is on a trip to Romania.

The main event with political implications today will be the Bank of England decision on interest rates at noon, but Graeme Wearden will be covering that on his business live blog.

As usual, I will also be covering breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web. But I’m afraid I will be wrapping up today at lunchtime.

You can read all today’s Guardian politics stories here.

Here is the Politico Europe round-up of this morning’s political news. And here is the PoliticsHome list of today’s top 10 must-reads.

If you want to follow me or contact me on Twitter, I’m on @AndrewSparrow.

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If you want to attract my attention quickly, it is probably better to use Twitter.


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