Thread by @Sapere_vivere

1. As we can all see, Remainers are saying, as if it’s a fact, that a no-deal Brexit would be a disaster, a catastrophe for the U.K.
Where has this assertion come from all of a sudden? Does it have any substance? Is it in fact, a fact?
Let’s take a look.

2. There have been several forecasts from HMG, NIESR, Panmure Gordon etc modelling the impact of a no-deal Brexit over the next 12 years or so.
They estimate that a no-Deal situation would result in the GDP of the U.K. being around 5-8% lower than if we had remained.

3. So this means that the GDP of the U.K. would be approx 0.5% lower each year according to these forecasts.
0.5% per annum.
That’s lower than otherwise, not a contraction. So, eg, if the U.K. were to grow by 1.5% in 2020 whilst still in the EU, then outside it would be 1.0%.

4. Now even if you believe these forecasts, and take the headline figure at face value, this is not a disaster, not a catastrophe.
The hyperbolic language from Remainers is wrong. We can all see what they are trying to achieve.

5. Remember these are flawed forecasts, even if we accept them at face value. But let’s dig deeper and see what’s behind the headline number.
Let’s look at the NEISR forecast.
It states that U.K. growth will be 5.5% lower, on a no-deal basis, by 2030 than if we’d remained.

6. Most of the lower growth comes through assuming lower immigration (-1.8%) and lower productivity (-3.0%).
So that leaves 0.7% over 12 years from loss of SM/CU and increased friction. That’s about 0.055% pa or around £1b in GDP.

7. You might ask why such a large slice is removed due to lower productivity. U.K. productivity growth has been slow recently. Many theories abound but it’s possible a lot came from businesses prioritising cheap labour over investment (our full employment model).

8. Leaving the EU and being able to frame our own rules, regulations and trade policies etc should enable the U.K. to focus on areas designed to boost productivity. A decrease in available cheap labour might have the same effect on businesses.

9. The Treasury forecast from a few months ago makes a number of highly dubious assumptions. Again there is a reduction of GDP due to lower immigration. Eg there is a ground zero assumption on the no -Deal UK-EU relationship that takes no account of current regulatory alignment.

10. Indeed as you go through these forecasts there is a heroic amount of guesswork to be seen. There is also a lot left out. Areas the Treasury didn’t model were the following. Have a look and see if you think any of these might have some relevance.

11. They ignore the possibility that the U.K. will have greater flexibility and nimbleness to design laws and trade, aid, development, immigration policies that suit the unique make up of the U.K. economy rather than a generic EU economy. (Otherwise known as Germany)

12. They ignore the fact that there could well be benefits for the U.K. to design legislation for its own internal business arrangements., after all the greater part by far of our economy.

13. They ignore the fact that without having to cater for special interest vetoes of a few thousand people in a population of 1/2 billion that it might be possible to get trade deals, or the day-to-day trade friendly micro-legislation done in less than 10-20 years.

14. They ignore, as far as I can see, the diminishing position of the EU in terms of global trade, the problems of EU imbalance around the Eurozone, EU demographics and long term structural issues.

15. These forecasts basically tweak a few variables and assume everything else will stay the same. So they are saying that for instance a Eurozone crash in 5 years time would have a similar effect on a U.K. in the EU and a U.K. out of the EU and focused more on the ROW!

16. So basically they are mostly worthless guesses. Show me a forecasting unit with a great track record.
But Remainers like to treat these as facts. They are not facts.

17. And now they have cast aside even their own “facts” (the forecasts they’ve been bashing Leavers with for years) and are shouting from the rooftops that Brexit, especially a no-Deal one will me an unmitigated catastrophe.

18. So next time you’re confronted with this overblown rhetoric ask where the actual evidence is. Ask for the sources. Ask for the details. Ask for the assumptions. Ask for what’s included and what’s left out.
But don’t hold your breath waiting for a reply.

Ends.