Brexit

[DrPatrickBarry]

simply point out that the Bank of England doesn't have a very good forecasting record , but he still resorted to what I would definitely regard as personal abuse.

Yes below is going beyond commenting on difficulty/reliability of forecasts.

He told BBC News that Mr Carney was a “second-tier Canadian politician” who "failed" to get a job at home.

If only the BOE had carried out an analysis of the forecasts produced by the Brexiteers, but wait; they have not done any.

[Muddy Retriever]

If only the BOE had carried out an analysis of the forecasts produced by the Brexiteers, but wait; they have not done any.

Not true, some have.

https://www.economistsforfreetrade.c...op-economists/

I have no objection to the Treasury, Bank of England, ONS etc producing forecasts - it is there responsibility to do so. What I object to is the interpretation of them as being "facts" when they are anything but. So much depends on the assumptions that are put in to them.

Even less politically motivated forecasts can be blown off course by external events anyway. As already mentioned the Treasury didn't just get their pre-referendum forecast for the next two years slightly wrong, they got it spectacularly wrong. Just as a reminder by now unemployment should have increased by 500,000 to 8000,000. In fact it has dropped by about 240,000. So why should we trust their 15 year forecast?

And this is not just a one-off, the Treasury has a long record of being wrong - ERM and the Euro for example. If the UK didn't join the latter the City of London was apparently going to become a backwater.

As for the Bank of England, even Paul Krugman the left wing American economist who is no fan of Brexit thinks their report is politically motivated.

Ultimately the only way we will ever know if Brexit is going to be a success is if it is given a chance to happen and then we will see. I am now convinced that it is not going to happen at least not in any meaningful sense. The Establishment in the form of the Government, Civil Service, Bank of England, Parliament, BBC etc. are going to make damn sure it doesn't.

[shaunaneto]

Carney was an equivalent of a Civil Servant in the Canadian government rather than an elected politician.

[shaunaneto]

Both the recent reports look politically timed to me.

So much of what’s out there is driven by a desire to further an agenda. Including the Economists for free trade you be a fool to believe any of it as gospel.

[shaunaneto]

The Establishment in the form of the Government, Civil Service, Bank of England, Parliament, BBC etc. are going to make damn sure it doesn't.

Those you’ve voted to give more power to.

The BBC always makes me chuckle. I see a constant stream of accusations levelled at the BBC that it’s either pro Brexit or doesn’t do enough to hold Brexiteers to account for such and such a claim.

[shaunaneto]

If anyone is interested for a different viewpoint on how things are going this is an interesting opinion piece

https://www.newstatesman.com/politic...xit-dream-died

You may not agree with the opinion given but it’s worth a read to see another side.

I’m sure CL will love it!

[DrPatrickBarry]

Killer paragraph

Britain, as politicians of all parties have long lamented, does not export enough. But there is little evidence that customs union membership is the main obstacle. Germany’s largest trade partner, for instance, is now China (to which it exports five times more than the UK). Britain’s problems are domestic in origin – low productivity and an under-skilled workforce, a lack of investment and poor infrastructure, an overdependence on finance and services – and domestic in solution.

[Witton Park]

On the issue of another referendum here is my twopenneth.

Over my 35 years of being able to vote there have been a number of occasions when the vote hasn't gone the way I hoped. On each occasion the result of the vote has been implemented and on some occasions such as with General Elections there is the scope to revisit the previous vote.

The country as a whole decided to leave. Arguments about who understood what are irrelevant as the debate was had just like all other political debates. Opinion was presented as fact, some facts were embellished and some outright whoppers were told. Find me a general election, even a council election where that hasn't happened.

The electorate were warned that there might be a financial hit to the economy and they accepted it.

So the politicians have to get on with it.

They have obfuscated for 30 months. We should have been prepared to leave without a deal on WTO terms and yet the estimates I have seen are that we are 6-12 months away from that.

That is a dereliction of duty. Almost an effort to straight-jacket the country in to a deal which most seem to agree is a dog's breakfast.

If a second referendum were to take place, as we have already ruled out Remain, it should be on a deal or no deal basis.

Accept the deal that the Government of the day have spent two years putting together, or leave without a deal.

In the future, of course any party can propose that we apply to rejoin. They can set that out in a manifesto and will have the opportunity to explore that.

[Muddy Retriever]

Killer paragraph

Britain, as politicians of all parties have long lamented, does not export enough. But there is little evidence that customs union membership is the main obstacle. Germany’s largest trade partner, for instance, is now China (to which it exports five times more than the UK). Britain’s problems are domestic in origin – low productivity and an under-skilled workforce, a lack of investment and poor infrastructure, an overdependence on finance and services – and domestic in solution.

It is true that the trade deficit has been a perennial problem for the UK. Leaving the EU and its Customs Union is not a silver bullet. It also depends on the actions of the UK Government and the extent of opportunities seized by British companies.

But the UK's trade is already more global that any other EU country. It is the only country in the EU that exports more to the rest of the world than to the rest of the EU and this difference is growing. So being in the Custom Union suits the UK less than the rest of the EU. It makes more sense to enhance these already strong global links by signing free trade agreements with countries round the world. The rest of the world is after all growing at a quicker rate than the EU.

[Witton Park]

In terms of the Economic Analyses I think there is a clear risk that many are mired in confirmation bias.

Take the pre referendum Treasury forecast. It wasn't actually the Treasury's forecast. It was taken from a forecast done by The Centre for Economic Performance at LSE. The LSE model predicted a lower GDP from leaving of between 1.3% and 2.6% but by the different weighting and some spurious assumptions the Treasury model gave us 6.2% and 7.5%.

The IFS also used the same LSE model and weighted differently and came out with somewhere inbetween.

To the public these are all treated as assessments that are done independently, when they are really just a form of group-think.

On the other side we have such as Economists for Brexit and whilst I am a leaver, I also look with sceptical eyes at their forecasts.

The reason I do, is that they all put their models together, and whether the model is a good one or not, the information they have available to them is often flawed.

Let me give you an example.

I've spent around 30 years in the Footwear Industry, manufacturing here and then involved overseas.

Dutch data I have seen shows that they export around £500m of footwear to us a year.

So any of these economists models will take that figure along with all the other figure and most likely add an average tariff to it, or perhaps they go deeper and break it down in to sectors. They will also assume customs clearance costs involved with these Dutch imports.

But the Dutch do not have a footwear manufacturing industry anymore, like the UK. These imports are items such as Adidas trainers, Aldi Promotions, Tamaris Ladoes Shoes.... that are cleared on the Continent and then shipped through the Continent's supply chain.

They mostly come from the Far East.

If we left under WTO terms, seen as the Armageddon option by some, these items would be just routed directly to the UK at no extra cost or negligible extra cost.

In fact they could even arrive at a cheaper landed cost, yet the modelling will not show that.

OK this is just £500m a year of shoes from the Dutch. But they also have £1.5 Billion of clothing, and this phenomenon is also significant from Belgium and Germany. It is estimated that it could be around 8-10% of our imports from the EU.

So if you take 10% of our imports, add an extra % on to represent the added cost under a WTO deal, then you are over egging the effect and making the figures look worse.
This is what the 2016 Treasury Document said.
"2.52 This would present a difficult policy choice. Imposing tariffs on imports from the EU would make these goods more expensive. All other things being equal, this would mean the price of imported goods including cars, clothing and foodstuffs would rise. This would affect the disposable income of households, as for the same earnings consumers could purchase fewer of these goods."

To what degree will it affect the outcome? Well we are talking the worst case scenario forecasts are around 8% lower GDP by 2035. That's only about 0.1% GDP per quarter over the period.

So they only need to be a fraction out and they can make a positive analysis in to a negative one.

So consider them by all means, but don't just take them in and accept the figures that suit your position, as almost certainly they are all about as likely to be right as a stopped clock.