Debate Magazine

That Leaked Brexit Report. I Think This is What's Called "cognitive Dissonance"?

Posted on the 31 January 2018 by Markwadsworth @Mark_Wadsworth

From Buzzfeed:
The government's new analysis of the impact of Brexit says the UK would be worse off outside the European Union under every scenario modelled, BuzzFeed News can reveal. The assessment, which is titled “EU Exit Analysis – Cross Whitehall Briefing” and dated January 2018, looked at three of the most plausible Brexit scenarios based on existing EU arrangements.
Under a comprehensive free trade agreement with the EU, UK growth would be 5% lower over the next 15 years compared to current forecasts, according to the analysis. The "no deal" scenario, which would see the UK revert to World Trade Organization (WTO) rules, would reduce growth by 8% over that period. The softest Brexit option of continued single-market access through membership of the European Economic Area would, in the longer term, still lower growth by 2%.

Straight off, it's not the "government's" new analysis, this is something cooked up by civil servants, who have their own agenda (Project Fear/Remain).
Be that as it may, let's take the report at face value. People's responses are a whole mess of contradictions.
1. They can't forecast GDP changes even one year in advance, they don't even know what GDP actually is, it's all based on sampling and interpolation. So doing two forecasts 15 years into the future and then subtracting the difference is pretty meaningless. Even if they are right about 8% lower GDP after 15 years, that's losing half a per cent a year. Instead of GDP growing 2% a year it grows 1.5%. Who'd even notice?
2. The usual suspects are rubbing their hands with glee at this. From The Guardian:
Why are the latest leaked forecasts so damaging?
They spell out that all varieties of Brexit on offer would make Britain poorer, significantly so in the case of anything other than staying very closely linked to the EU through single market membership. While some ministers maintain they can still flout EU wishes and achieve this without full membership, it is telling that this option is not even among those presented to ministers in the “cross-Whitehall exit analysis” obtained by Buzzfeed. The economic modelling used also punctures the still popular claim among Brexiters that new trade deals overseas would more than compensate for lost EU trade.

Hang about, isn't The Guardian full of articles like this:
The idea that GDP growth is the wrong measure of a nation’s progress has become so widely accepted as to be the new common sense. Yet it is still the go-to number for lack of a credible alternative. Measuring happiness or wellbeing is fraught for numerous reasons, not least of which is that such indices make questionable assumptions about what it means to live a good life...
It is a truism that money has no value in itself, only in what it allows you to buy. Money is only a proxy for wealth, and a deeply imperfect one at that. Real wealth consists in what we are able to own or consume, not in the size of our bank balances. Real wealth therefore grows when we can have more of, or better of, the things that enable us to live well. We are truly enriched by warmer houses, better medical care, healthier food.

Sounds a bit like "... let's spend it on the NHS instead" to me. So they can piss off.
3. Labour MPs are clamouring for the report to be published. It has been published - by Buzzfeed.
4. The Conservative Party have an undeserved reputation at being better at managing the economy than Labour (they're both equally bad, and it's down to luck as much as anything). So why are Conservative MPs now in such a hurry to dismiss concerns about the economy? And why didn't they ask the civil servants to do projections for whatever post-Brexit agreements which the Conservative government would prefer? That's the economically competent thing to do.
5. We had Project Fear for a year before the referendum, with predictions far bleaker than the latest "analysis". A lot of "Leave" voters were quite clear about this: they don't care about a percent or two of GDP growth gained or lost, they "want their country back". Be that as it may, people's main concern is that things don't get worse, things don't change too much too quickly, job security etc. Whether your income next year is 2% higher or 1.5% higher doesn't matter, as long as it's not drastically lower.
6. The Home-Owner-Ists, which is most politicians and most of the electorate, Leavers and Remainers alike, can fuck right off, fuck off a bit more and then keep going. They engineered the last land price bubble/credit bubble and were happy for others to pay the price of the "financial crisis", worse than that, they are happy for everything to be thrown at maintaining the house price/credit bubble (in London and the South East, at least, rest of the country can go hang) by throwing everything at it and not giving a shit about how long the recession drags on for.
The IFS estimate is that GDP is currently fifteen per cent smaller than it would have been in the absence of the "financial crisis". OK, that's also a projection and subject to a wide margin of error, but at least they are comparing a projection with actual reality and not two future projections. And the IFS are pretty reliable/neutral.
We could add a percent or two to GDP growth each and every year in perpetuity and more or less eliminate recessions by shifting taxes from earnings and output to land values. But that would push land prices down, which the Homeys don't think is a price worth paying.


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