THE forecasts by the Treasury and the Bank of England for a no-deal Brexit are terrible, but since Philip Hammond is a Sagittarian and Mark Carney a Piscean, the two most unreliable signs of the Zodiac, we can safely discount them.
You may think this a poor argument, but economics, for all its value in analysing generalities, is not much better than astrology at predicting specifics. Economists study rational behaviour, but it’s not the fact that some people act irrationally which makes it impossible to make accurate economic predictions; it’s built into the model. If everyone acted completely rationally, market behaviour would actually become more unpredictable, because only unforeseeable events would move markets.
There are plenty of reasons to think that the general assumptions of forecasters are right – that Brexit will be disruptive and, at least in the short term, damaging to the UK economy. But there are plenty of reasons not to think that, too. Not least of them the fact that every single prediction made about what would happen in the immediate aftermath of the referendum vote (with the exception that the pound would fall) turned out to be wrong.
There has been growth (greater than Eurozone growth) every quarter, rather than the promised recession, inward investment went up, employment and the FTSE250 both reached all-time highs, and so on.
The response from forecasters has been to say: OK, we got all that wrong. But the economy would have done even better, had it not been for the referendum vote. Well, maybe. After all, we haven’t had the easy negotiations predicted by the pro-Brexit camp, either.
They may, with reason, claim that not one of the several workable prescriptions for a clean exit was followed, but they were also the people who assured us that our EU membership was an establishment stitch-up, so should perhaps have anticipated some such trouble. Particularly the Tories, who then selected as their leader a Remain supporter with no interest in trade, markets or liberalism, but with a swivel-eyed obsession with immigration.
Here’s another illustration of the value of prediction. Not long ago, Gavin Barwell, Theresa May’s Aquarian Chief of Staff, told Tory MPs that any attempt to drum up Labour votes to get the Prime Minister’s withdrawal agreement through Parliament risked splitting the party and bringing down the Government and, according to one Brexiter, “solemnly promised” that he never would. A few days ago, Mr Barwell addressed Labour MPs begging them to back the deal.
Meanwhile, Brexit-supporting Tories claim that 99 Conservative MPs plan to vote against the deal. You may be cagey about this prediction, too: remember that a couple of weeks ago they were sure that 48 of their number had sent in letters of no confidence in Mrs May as leader.
We are, in short, in a situation where no one has any confidence in what will happen on December 11, when MPs vote on Mrs May’s deal, but where we are also expected to take it as Holy Writ that a no-deal Brexit will make the economy smaller by exactly 9.3 per cent over 15 years.
The same analysis suggests voting for the deal will make the economy smaller by 3.9 per cent over the same period, which explains why the only person still prepared to pretend it is a good deal is Mrs May. She is now selling it to Remainers as more or less the same as staying in the EU, or anyway the next best thing, while telling Brexiters that if they don’t vote for it, we won’t get to leave at all, or that if we do, Armageddon will follow. She is, after all, a Libran.
But since neither she nor anyone else has any idea what’s going to happen in under a fortnight’s time, I find her sureties about the longer term unpersuasive. Even the anti-Brexit economist Paul Krugman – like Mr Carney, a Piscean – thinks the no-deal catastrophe predictions are wildly over-stated.
But the options presented by Remainers are unequally uncertain. We don’t know yet whether just revoking Article 50 and cancelling the whole thing is possible at all. We can make a guess that if it is, it wouldn’t end up with the UK in an improved position, or even the status quo ante. The EU would, bluntly, know it could walk all over us, which would no doubt inform its attitude towards everything from the rebate to Schengen and membership of the Euro.
The other great hope – the “Right Kind of People’s Vote” – is no foregone conclusion, either. It can’t be done without reversing the biggest popular vote ever and a parliamentary majority mandated by the manifestos of both the major parties; it probably can’t be done in time at all.
Even if none of those things were true, what makes the Remainers certain the outcome would be different? Many polls suggest they would now win; the polls before the last referendum claimed the same thing, and, funnily enough, by the same sorts of margins.
We have at least been able to assess the proposed deal, but everyone who has done so has concluded that it’s terrible. Which leaves one last great unknowable: what can be done if it is defeated?
Naturally, it is no more possible to know that than any of the other things. Perhaps the Government would fall, or perhaps we’d have a change of Tory leader; perhaps someone would pull another previously mooted solution, such as Efta membership or a Switzerland or Canada-style deal with a lot of plus signs after it, out of the bag, or perhaps we’d crash out with no deal at all.
There is one advantage in those possible scenarios, though, which doesn’t apply to Mrs May’s deal, another vote, or giving the whole thing up as a bad idea. It would both respect the referendum result and place the choices about what to do next in the hands of the UK Government.
You may doubt whether, on their track record, this is a recipe for success, but it would at least be an assumption of responsibility. I believe the astrologer Mystic Meg has invested much of her considerable earnings in a company that owns a string of racehorses. That is an example of putting your money where your mouth is.
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