Whitehall’s ‘Propaganda War’ is based on ‘terrible economics’ and is undermining Brexit.
The Treasury, Bank of England and civil service have been complicit in seeking to “reverse” the result of the EU referendum, according to a major new economic report just published. Constant “anti-Brexit” interventions based on “an astonishing catalogue of bad economics” are being used as “propaganda” to ensure that the UK remains in the EU.
The latest Economists for Free Trade report destroys the “absurd anti-Brexit assumptions” made by the Treasury that are used to claim the UK economy will decline by more than 7 per cent of GDP.
The Treasury has wrongly assumed that • There are no gains from Free Trade with the non-EU world because trade barriers would only be reduced slightly and other countries would do little to alter theirs. o This is totally incorrect, in Australia high protection against the rest of the world was removed and the country was then able to strike trade deals “with all and sundry”.
This alone boosted Australian GDP by over 5 per cent. •
“There will be a ‘border war’ with the EU, inspections will rise and traffic will slowdown. The effect will be the equivalent to imposing tariffs of 25 per cent. This is “fantasy” as it would be “illegal under WTO rules”, would result in “economic suicide” for EU port authorities “and businesses in the thousands” could take the offending port authorities to the EU and UK courts”.
In the event of tariffs being imposed following a no deal Brexit, the UK would be disadvantaged. The UK would receive £13 billion in tariff revenue from EU exporters whereas the EU Commission would receive £5 billion from EU importers.
Nobody is advocating nonsense
“Following the UK agreeing trade deals elsewhere, we would enjoy lower world prices forcing EU exporters to absorb UK tariffs. • There will be almost no gains to the UK taking back control of our economic regulations. o This is despite the damning evidence that EU regulations have damaged the UK’s competitiveness. • The UK will stop skilled immigration from the EU o Such a move would be a ridiculous “self-harming” policy and nobody is advocating such nonsense.
“It should be unthinkable for our Civil Service to play politics and conspire against the people’s 2016 decision so nakedly.This deceitfulness is bad enough but worse is that their propaganda efforts would lead to terrible economics.
“The message to Brits is: unlike these self-styled experts, you got this issue right. Yes, you were right to ask for your democracy back, and yes, this is also good for the British economy, contrary to all that Project Fear”.
Despite Project Fear, the UK economy has grown fairly steadily, unemployment is historically low, employment is at record highs and wages are growing faster than prices.
Tackling the recent onslaught of “BrexArmageddon”, “For their latest scary Brexit No Deal scenario the Bank has again invoked a crisis based on uncertainty and plunging confidence – heavily focused on what happens with the Dover-Calais ferry route. But No Deal as we have seen will not disturb the border and there are alternative ferry routes available.
“As for shortages of vital foods, medicines, or vital components, they depend on the same story, now discredited by the same port authorities who are worried about losing market share to competing ports. With border procedures changing, there will be some short run hiccups, as some firms may fail to adapt quickly. But they will soon learn, and will get extra support and credit to tide them over.
“Change is a continuous feature of any economy and it goes against the rationality we normally assume in market participants to forecast as if they cannot cope with it. It is time that the Bank and the Treasury stopped making arbitrary assumptions that our flexible firms and households will suddenly behave like headless chickens. Instead they should assume rational expectations, by now a widely supported assumption in forecasting”.