Brexit: Nigel Farage and Vince Cable clash over referendum
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Jonathan Portes, a professor of economics at King’s College London, said last month that leaving the bloc will be “a significant but not catastrophic” drag on UK economic growth for many years. He added it was “not a blowout, but a slow puncture”.
But in a column published by The Independent this evening, the academic admitted that wage growth could defy expectations.
His comments came after data from recruitment firm Reed found that average salaries this year have risen by 18 percent across hospitality and catering, 10 percent in retail and four percent overall.
Professor Portes wrote: “Most economists argued that the ending of free movement after Brexit would be unlikely to do much to boost wages for low-paid British workers.
“Are we now being proved wrong?
“Were our earlier estimates (not really ‘models’, since little sophisticated analysis or theory was involved – it was just what the data said) incorrect, or is it simply that circumstances are very different?
“As you’d expect from an academic, my short answer is ‘more research is needed’. But that doesn’t mean that there aren’t some useful things we can say now.”
He added: “There are very clear and consistent reports of staff shortages as businesses – especially in the hospitality sector – reopen.
“And there is clear evidence that there was indeed a large exodus (even if we remain uncertain as to its magnitude) of EU-origin workers during the pandemic. It’s entirely reasonable to suggest that the two are connected.”
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Despite appearing to agree that wages are rising, the academic remained coy over the reasoning behind this.
He responded that “more data was needed” before a firm conclusion could be reached.
However, Professor Portes conceded that this didn’t necessarily mean that Brexit couldn’t have a positive impact on wages.
But looking at previous data, he also pointed out that overall Brexit “reduced, rather than increased, real wage growth between the referendum and the pandemic”.
And rises which were reported in industries most dependent on relatively low-paid service workers only rose about 2.5 percent a year in 2017 and 2018, he said.
The impact that the COVID-19 pandemic has created also needs to be assessed once restrictions are completely lifted, he said.
In conclusion, Professor Portes said: “Until we have at least a few months more data that tells us what actually happened after most restrictions were lifted, we should be very cautious indeed about making general claims about the impact – or not – of changes to migration patterns.”
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