Fed-up with all of the contradictory forecasts and statements about the referendum on Britain’s continued membership of the European Union? You probably should look away.
I would like to see another forecast – I know, that suggests either some kind of a weird fantasy obsession or that maybe I am just sad but let me explain.
The UK Treasury have been burning the midnight oil and going into ‘spreadsheet frenzy’ to produce forecast after forecast that shows how much the UK economy would suffer if the UK electorate had the nerve/courage to vote for Brexit. So I am not alone in wanting forecasts! Maybe not even sad.
The latest forecasts suggests a 12% decline in the value of Sterling, an increase in unemployment of up to 820,000, house price declines of 10-18% and a deep recession as a result of the shock to the economy, from a Brexit.
Now, these Treasury economists are supposed to be smart and I suppose that the reason that they are getting the same ‘results’ as other forecasting bodies is because they are all using the same economic model. So rather than being independent verification, as is being touted, we instead have a reiteration of the same result because the ‘domesday’ data input and the model used is largely the same. The surprise would be if they came out with a different result.
I would like to see a forecast that looks at the impact of a Brexit, not on the UK economy but rather on the economy of the remaining EU countries.
The doomsayers include in their forecasts projections that immediately a Brexit vote is achieved the four horsemen of the apocalypse will descend. We will have Pestilence, Famine, Death and of course War. Additionally, overnight or close to it, the strongest growing economy in the EU will dive into recession.
What about the effect on Germany? Or on France or the Netherlands?
In 2015, the Germans exported US $100 billion of their excellent cars and other goods and services to the UK. They then imported just US $46.5 billion from the UK and so enjoyed a surplus of US$ 53.5 billion.
In the same year, France exported US$41.5 billion and imported $27 billion, so having a US$ 14.5 billion trade surplus. The position for the Netherlands was exports to the UK of US$50.7 billion and imports of $34.2 billion, so a trade surplus of $34.2 billion. I am not sure if that Netherlands import figure includes items that are ‘imported’ as part of a trans-shipment process through the Rotterdam super-port but you get the drift.
Now – still with me?- If the Sterling exchange rate did fall by 12% (why not 10% or 15%?) then this would make UK exports cheaper and if proper WTO duty rates, of around 4%, were used, rather than the extremely high rates used in the Treasury model, then the falling exchange rate would completely eliminate the effect of any duties and would still provide an export boost.
Problem is though, that this 12% fall is one-sided. It supposes that the other global economies would be okay and stable and only the UK would suffer from a Brexit. Consider though the effect of the UK retaliating against Germany, France and the Netherlands, if they and the rest of the EU imposed onerous customs duties on the UK. If the UK did exactly the same and applied the same rates of customs duties, the economies of these countries would undoubtedly suffer and this would ripple on and impact the Euro exchange rate. So maybe that 12% decline in Sterling’s value is incorrect.
Let’s suppose that the USA also followed the EU lead and imposed similar level duties. Then the US economy and the US $ exchange rate would also suffer as they have a small trade surplus with the UK. Albeit not too much but the impact would not be benign.
We all know Disraeli’s saying about ‘lies, damn lies and statistics’ however, what we are being presented with are one-sided forecasts that simply serve the UK government’s position. In none of these ‘forecasts’ do we hear the impact of Britain’s reduced contribution to the EU. This is variously estimated at £55 million per day! Again, this would positively impact Britain and negatively impact the EU. Those particular coins, unsurprisingly have two sides. Nor is any of the positive effect of reducing the mountains of ‘red tape’ that strangle UK and EU business, shown.
Also consider that a fall in house prices would be a boon for all those young people trying to get on the housing ladder. Yes it would negatively impact those people who speculate in the housing market – foreign flight capital, members of Parliament, etc., but overall, the effect would be positive.
In the past, UK Prime Minister, David Cameron spoke of presenting the case around the referendum to the British people and letting them decide. Instead of doing this, he and his Chancellor, George Osborne are becoming ever more outrageous in the claims and use of data. Indeed, they are starting to make Tony Blair’s ‘dodgy dossier’ look like a respectable, sober and credible document!
George Osborne, speaking when he established the Office of Budget Responsibility, said that the need for this organisation, independent of the the government, was because in the past, HM Treasury forecasts were found to be biased and dubious because of the political interference. So when we see the drivel now emanating from Osborne’s Treasury we know that we need to filter any forecasts through the prism of number manipulation so as to achieve a pre-determined outcome. In other words, don’t trust or set any store by what they say – they say what their master – George Osborne – wants them to say.
To close, another forecast.
David Cameron has said today, that the cost of Brexit could add £230 to the cost of a holiday in Europe, for a family of 4. Of this is a ‘could’ rather than a ‘would’ and of course this figure is ‘supported’ by the usual dodgy statistics and calculations from the widely discredited forecasts publishers. However, let’s say that this time, the number is right, does £57.50 a head sound a high price to pay for the restoration of Britain’s long-held democratic traditions? Britain has paid a far, far higher price to defend its democracy, in the past. A price in blood and lives, not in £ sterling.
Jean-Claude Juncker, the unelected ‘President’ of the European Commission, who hails from Luxembourg, has threatened the UK by saying that ‘deserters’ can expect no assistance from the EU. Well Mr Juncker, I suggest that you hit the history books. Go back to the history of the second World War. In 1940, after the fall of EU members France, Belgium and Netherlands, at the hands of the Nazi hordes, Britain, aided by its colonies and Commonwealth allies, stood alone against the Nazis. Britain didn’t desert Europe’s people in 1940 and we won’t desert them now or in the future. Brexit will provide a liberating example for those Europeans now trapped within an anti-democratic EU. Brexit will allow those countries that suffered under post-war Soviet domination, to experience true freedom and democracy, when the inevitable collapse of the EU occurs.
£57.50 a head for freedom – bargain of the century – where do I send my money?
Vote Brexit, shake off the yoke of anti-democracy which is weighing us down and restore Britain’s freedom.
This blog was originally published by the author 25 May 2016. http://thismakesmemadyoutoo.blogspot.com/2016/05/camerons-dodgy-dossier.html