Is the Treasury producing reports for political motives? The Treasury report before the Referendum, called HM Treasury analysis: the immediate economic impact of leaving the EU was so extreme that everyone called it “Project Fear”. The punch line of the report was “..a vote to leave would represent an immediate and profound shock to our economy. That shock would push our economy into a recession and lead to an increase in unemployment of around 500,000, GDP would be 3.6% smaller..”. That was just for 2016-17! The report, on page 57, has the following graph that summarizes the Treasury findings:
By 2017 the UK economy was predicted to experience an unprecedented and huge recession due to the Referendum alone. Was this Treasury prediction utter incompetence or was it malicious? The best clue to whether it was incompetence or evil (yes, evil that trusted advisors would lie) is that the Treasury amended its predictions not long after the referendum because the UK economy was not experiencing utter meltdown:
Notice that these current Treasury predictions go well past the date of actual Brexit.
The lesson from this is that even if the Treasury officials who produced the “Project Fear” predictions were incompetent they were so incompetent that these officials must be dismissed. If the predictions were politically motivated then the officials must be dismissed. They must be dismissed either way.
This brings us to Project Fear Mk2, the snappily named: “EU Exit Analysis – Cross Whitehall Briefing” which was leaked to Buzzfeed.
This analysis is nowhere near as catastrophic as Project Fear, it predicts that a comprehensive trade deal would reduce UK GDP growth by 0.3% a year (5% over 15 years), a WTO exit (incorrectly labelled no deal) would reduce UK GDP Growth by 0.5% pa and remaining in the Single Market would reduce UK GDP by 0.1 % compared with remaining in the EU. Most of these “losses” in GDP growth are derived from the idea that migration will be reduced (see Buzzfeed) in all scenarios except the Single Market.
Migration into the UK is so huge within the Single Market that it increases the workforce by 1-2% per annum. If these migrants all earn the average wage then migration increases total UK GDP by 1-2% per annum but it obviously does not make any of us richer. All of us are still earning the same amount but there are just more of us. This is why the effects of Brexit policies should always be measured in terms of GDP per head, not overall GDP.
It is this deliberate confusion between GDP and GDP per head that proves that the Civil Servants who produced “EU Exit Analysis – Cross Whitehall Briefing” were doing so for political reasons.
Project Fear Mk2. the “EU Exit Analysis – Cross Whitehall Briefing”, was a political paper produced in the wake of the OBR and others pointing out that UK productivity had stalled since 2008. The Machiavellian Civil Servants saw that if this is happening then they could make up a story to fool the non-numerate members of government, Parliament and the population into thinking that Brexit would be worse than staying in the EU. These Civil Servants should be sacked.
What none of the Treasury reports has mentioned is that the UK Trade Deficit with the EU is costing us 4% of GDP growth a year. Without this Trade Deficit the UK will be 60% better off in 15 years whatever the deal.
Yes, Trade Deficits directly reduce GDP – see Calculation of GDP.
It is clear and obvious that Civil Servants must be sacked for either incompetence or political bias or both. It is also clear that Ofcom needs a new Head because, had Project Fear been exposed by BBC journalists when it was clear that it was a heinous attack on our democracy then Project Fear Mk2 would not have happened. Ofcom must not turn a blind eye to News Suppression by the BBC, it is worse than fake news.
This post was originally published by the author on his personal blog: http://pol-check.blogspot.com/2018/02/the-treasury-reports-is-treasury-really.html