Economic data and forecasts are being mined ruthlessly by both sides on the Brexit battleground.
Dry numbers have been – horrible word – weaponised. Outside of the political and media bubble, people are bamboozled and more than a little bit bored.
As the Brexit camp never tires of telling everyone, Project Fear has not materialised. George Osborne in 2016 scored a huge own goal by predicting a vote to leave would tip the economy into recession, lead to half a million job losses and a huge hit to growth.
Economic data and forecasts are being mined ruthlessly by both sides on the Brexit battleground
None of it has happened. But the Brexiteer take on the economy is pretty dodgy too. The UK is doing just fine, we were told last week, because we’re growing faster than Japan and Italy.
Cue hollow laughter. Italy is a total mess, with high youth unemployment and a basket-case banking system. Japan has struggled for decades. More pertinent, perhaps, is the fact the UK is performing worse in terms of GDP growth than almost every other developed economy, but that is glossed over.
The Brexit camp even used as ammunition the better-than expected public borrowing figures for July. These were taken as evidence that post referendum Britain is a land of surplus and plenty.
To use one month’s figures in this way – even if they are part of a positive trend – is more than a touch misleading. Particularly when we have a debt mountain of nearly £1.8trillion and an ageing population that will be a burden on the public purse for decades to come.
Chancellor Philip Hammond is in hot water for being a gloomster
A few good months won’t magic that away, and neither will Brexit. If fewer skilled migrants come here, the worker to pensioner ratio is likely to get worse, unless people start having many more children or dying much younger. Both sides bombard the public with data and facts, cited without context, aiming to score points rather than to illuminate.
Who, if anyone, does this benefit? It certainly doesn’t lead to greater public understanding, or help people and firms navigate the upheaval of Brexit.
There is also a fundamental misunderstanding about the figures bandied around. Forecasts and data are often based on samples and are subject to sometimes major revisions.
If they are to be of use at all, they need to be weighed in a spirit of informed scepticism, not ramped up as propaganda tools in an atmosphere of tribal politics. By the same token, the biggest costs attached to Brexit are probably unquantifiable. It is impossible to measure the opportunity cost – the gains we have foregone by spending so much money and energy on Brexit instead of investing and coming up with innovations – but it is nonetheless a real loss.
Chancellor Philip Hammond is in hot water for being a gloomster because he said a no-deal Brexit will result in a 5 to 10 per cent hit to growth, and repeated official estimates that the economy will be £150billion smaller in 15 years. Brexit supporters say he’s got it wrong. He probably has. Chancellors – and economists – get many of their predictions wrong.
It would be surprising if they didn’t, considering the complexity of the analysis involved. Economists have failed to anticipate no fewer than 148 of the past 150 recessions, so they are highly unlikely to be able to foretell with accuracy what will happen in a no-deal Brexit 15 years hence.
They are, if anything, getting worse at making forecasts because the world is getting more complex. That profession, or perhaps it is a pseudo-science, needs to lose some of its arrogance and think hard about how it can better serve politicians and society. This has never been more important.
As Brexit approaches, there is a desperate need for sane and dispassionate debate instead of yah-boo economics.
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