Given that it has never happened before I think we can say with considerable certainty that both the process and the effect of a country leaving the EU are totally unknown.Originally Posted by DrPatrickBarry
Given that it has never happened before I think we can say with considerable certainty that both the process and the effect of a country leaving the EU are totally unknown.
I would not say "totally unknown ", once the Brexit details are known, the economists can get to work to put some costs to the new trading conditions.
How to you put a monetary value on being able to make our own decisions as a nation?
When I used the terms cost and benefit I wasn't talking about just monetary, in fact monetary is hardly a part of it at all.
However, in terms of economists, our independent OBR have forecasted poorly since they came in to place and everyone is expecting their forecasts tomorrow to be wrong.
But go back to the treasury forecast before the referendum. They actually gt part way there, but unfortunately the model they put forward was politically skewed.
The Remain model had an EU thriving, signing new trade deals, what you would call a dynamic forecast.
The comparable Leave model didn't even credit the UK with signing any bi-lateral deals between leaving and 2030.
A few examples:
If we take as a central assumption that the UK would seek a negotiated bilateral agreement, like Canada has, the costs to Britain are clear. Based on the Treasury’s estimates, our GDP would be 6.2% lower; families would be £4,300 worse off.
Direct quote from George Osborne taken from the Treasury Report opening comments.
When using the worst case scenario, the WTO model it comes out even worse at 7.5% / £5200
This makes it look like we will be poorer than we are now. What it really should say if it was being accurate and honest is:
“Based on our questionable economic model, if the UK votes to leave the EU, the UK will still continue to grow, it will still be economically successful, but just not quite as successful as if we stay in.”
The Treasury figures for this Canada style Brexit package, if accepted, show that the UK will have 31% higher GDP by 2030.
The Treasury assumed that with both Remain and Brexit, net migration would be 3 million by 2030. Yet with Brexit, even if the net migration does remain at 3 million, it is likely to be more selective and that should lead to a different demographic and should have a more positive effect on the UK economy than under EU freedom of movement.
The Treasury did not allow for any benefit from the removal of any EU regs on business following Brexit. Open Europe has done a report suggesting that Brexit could remove EU regs worth 1.3% GDP.
So on balance, when I examined the Treasury report which showed us to be less than 0.5% well off per annum by 2030 but still having had 31% GDP growth, I felt that cutting through the political crap, financially it would be broadly neutral or positive.
Last edited by Witton Park; 22-11-2016 at 10:41 AM.
Richard Taylor
"William Tell could take an apple off your head. Taylor could take out a processed pea."
Sid Waddell
I scan read that WP so forgive me if I missed something crucial but, as part of the EU, we have in place trade agreements with 27 EU member states and getting on for a further 50 other countries around the world. To benefit from those trade agreements obviously the EU have to put in place regulations (and if we want to carry on trading with the EU when we've left, we'd have to continue to abide by those regulations).
If we therefore 'hard brexit, we'll be jeopardising c 77 already in place trade agreements with other countries in the hope that we can negotiate some new ones of our own..... eventually.
As for 'benefitting' from less regulation, the EU regulations include one heck of a lot of employment protection, consumer protection, conservation and environment rules which, should we lose them, will be a huge backward step. Less regulation is in many cases the last thing we need - think of the criminality of some investment banks in the past few years, their mis-selling of financial products, pay day loans, poor disclosure of emissions (VW) to get an edge, politicians lying left, right and centre etc etc. And that's all been possible within the current regulations. Yeah, less regulations sounds 'such' a good idea....
I haven't scan read yours
I agree with you Stolly. You make some fair points. Just one thing, the 50 trade deals that the EU have, include some pretty bogus ones like the Isle of Man, Channel Islands, Faroes, Canaries...which are just simple accommodations for autonomous areas of the EU. A case of gilding the lily a little.
I was making the point that under the Treasury report, they found we would be around 0.5% per annum worse off by 2030 if we left the EU.
I accept that we have trade deals with the EU and there is a cost to leaving for some business and individuals.
But the 0.5% did not give even the scantest credit for any new deals that may arise after a Leave and by 2030 I think even the most pessimistic would expect us to have some deals in place.
Any new deals would help close the 0.5% up.
Companies that want to carry on selling to the EU will of course have to comply. But that is nothing new. I worked out of the Far East for 15 years and we had to be aware of EU regs, US regs etc I can tell you one of the worst was Clarks as they had CLarks UK and Clarks Companies North America and they bought the same product, in the same factories, made on the same tooling, but they had different labelling requirements, different physical testing environments and even different chemical regulations.
It was a nightmare at times.
In terms of regulation, the Open Europe figure undoubtedly contains things in the 1.3% GDP figure that we wouldn't want to lose. But it also includes regs we may well be happy to lose. So if we only lose 1/4 of what Open Europe says we can, that is a saving and closes the 0.5% gap again.
I'd argue against the EU being competent at regulating the financial sector. If there's likely to be another banking sector problem anytime soon, all the pundits are pointing towards the EU. They have broken all their regulatory rules around the Euro for political reasons. It staggers me how the currency has held up in the markets.
These are matters that should be done in the UK and then at the next level worldwide.
In terms of the labour protection, I'd like to see us do more, not less on leaving the EU. I don't see that we need to be in the EU and in fact while we have been in the EU and as we have continued to sign these treaties, I actually think the rights of workers have been eroded somewhat.
Richard Taylor
"William Tell could take an apple off your head. Taylor could take out a processed pea."
Sid Waddell
I would have though the UK was one of the main players holding back EU regulation of the financial sector.
It depends what you mean by holding back Patrick.
There are two aspects to this, non Euro issues and Euro issues.
In terms of the Euro issues, any countries joining had to meet certain criteria. Portugal has never met the criteria, Spain rarely and even France and Germany play fast and lose with the rules.
In terms of pan European regulations, of course the Eurozone have for some time wanted to draw some of the business from the UK to Frankfurt and Paris, so there have been issues. Some may say the UK is holding back, others may say the UK is looking after its best interests.
If on the Euro points, the EU had behaved impeccably, then there may be more sympathy for the other part.
Richard Taylor
"William Tell could take an apple off your head. Taylor could take out a processed pea."
Sid Waddell
Some Remainers point to the £350 million a week subscription to the EU claim as evidence of Brexit voters falling victim to "post-truth" politics. I agree that the claim was misleading as it related to gross rather than net contributions but the Remain side was every bit as bad and the £4,300 household income claim is a very good example. It was a gross distortion.
You mentioned some of the pitfalls in the forecast, i.e. presenting an increase in GDP as a fall and assuming the UK would have made no trade deals by 2030. In addition the Treasury report divided its projected GDP by total number of households as if this was a measure of household income. It isn't as GDP includes amounts attributable to companies. Current GDP per household is £68,000 while average income per household is £45,400.
Then even worse, to arrive at the £4,300 figure they divided projected total GDP in 2030 (which included for the expected increase in population) by total number of households today!
It's also interesting that they used households rather than per person, which you would expect. This was another attempt to inflate the figure and make it more eye catching.
And that's before you take into account that these people can't even accurately project into the next quarter let alone 14 years hence so for some Remainers to pretend that this forecast was "fact" was outrageous. Post-truth politics eh!
Except nobody but nobody believed the ludicrous £4,300 per household figure or took it seriously. Other than brexiteers rightly ridiculing it of course so, as propaganda, it mis-fired spectacularly and was a huge mistake. The lie about the £350 million a week though was truly believed by brexiteers and swallowed hook line and sinker. Even though the reality is that any saving of EU contributions is going to be dwarfed by the lost taxation revenue from our reduced GDP expectations
Posting Permissions
Reply With Quote