EU Brexit impact - Treasury Analysis

BobQ

MSE Insert:

Hi everyone, you might like to read Martin's take on it in his March blog: The EU referendum's hit the pound. Should you buy euros and other holiday currency now for the summer?

Back to BobQ's post...

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HM Treasury are about to publish a report on this:

http://www.bbc.co.uk/news/business-36068892

Britain's national income could be 6% smaller by 2030 if the UK leaves the European Union, a major report by the Treasury will claim.

The report says the size of the cut in gross domestic product would be the equivalent of about £4,300 a year for every household.

The major impact of leaving, the report argues, will be because trade barriers will be higher, which will hit exports.

And investment will be lower both within the UK and from abroad, it says.

Many believe that businesses will move at least part of their operations to the continent of Europe to be within the EU single market.

Borrowing costs for the government could also rise as investors demand higher repayments for supporting the UK's debts as the economy weakens.

Three scenarios

The 200-page report is likely to spark controversy............

More project fear I imagine they will say but what is the point of employing experts to do studies if not to understand what could happen based on the available evidence?

Shakethedisease

Should be a bit careful about this sort of thing really. Every major intervention similar to this in the Scottish ref backfired and support rose. Not enough in the end to go over the 50% but the polls were nowhere near as close as is in the Eu polls just now. Remain don't have 20% consistent lead to play with this time.

A lot of undecideds will get really annoyed about being told forcefully and 24/7 that their country cannot possibly ever hope to cope without the EU.

The firm Remainers will lap it up. Those that are undecided might not like what's being force fed to them with these sorts of reports. Also, to have an impact, it should've been left till a bit later. They've left the Leave campaign and the media that support it, plenty of time to retaliate.

HAMISH_MCTAVISH

Shakethedisease wrote: »

Should be a bit careful about this sort of thing really. Every major intervention similar to this in the Scottish ref backfired and support rose. Not enough in the end to go over the 50% but the polls were nowhere near as close as is in the Eu polls just now. Remain don't have 20% consistent lead to play with this time.

A lot of undecideds will get really annoyed about being told forcefully and 24/7 that their country cannot possibly ever hope to cope without the EU.

The firm Remainers will lap it up. Those that are undecided might not like what's being force fed to them with these sorts of reports. Also, to have an impact, it should've been left till a bit later. They've left the Leave campaign and the media that support it, plenty of time to retaliate.

Nice rant and all but to re-ask the question in the OP.....

"what is the point of employing experts to do studies if not to understand what could happen based on the available evidence?"

The attempt to discredit all the expert analysis as 'project fear' is idiocy on stilts.

Just as it was in the Indyref.

Shakethedisease

HAMISH_MCTAVISH wrote: »

Nice rant and all but to re-ask the question in the OP.....

"what is the point of employing experts to do studies if not to understand what could happen based on the available evidence?"

The attempt to discredit all the expert analysis as 'project fear' is idiocy on stilts.

Just as it was in the Indyref.

I'm voting Remain Hamish. Calm your pants.

However as someone who went from being mildly interested in Devo max in 2011, to an SNP member and pro independence in 2016. I can tell you that people like you will lap this up, people that are already Leave will hate it.

True undecideds as I was, won't like the Treasury getting involved issuing reports of doom and gloom insisting the UK will never cope outside the EU. Project Fear squandered a huge lead with reports like this from the Treasury and other officialdom. It'll irk a fair few of them that even the Treasury think the UK needs the EU in order to survive, and they'll start asking why. Obama is likely to compound matters still further.

It's also too early in the campaign imo. A week or so before the vote would've been better. Just like Osborne's currency intervention was far too early in the Scottish ref. It boosted support immediately afterwards with undecideds and up it went instead of killing it stone dead as it was meant to. It's when I personally went all in Yes in the Scottish ref.

People aren't stupid enough to accept facts wholesale without questioning the agenda behind them. Older people once again are the one's who are likely to swing this vote either way. Many of them who are currently undecided won't take kindly to being told that the UK is nothing without the EU. Ease off with the fear. It may backfire if the Remain camp get too reliant on it. They don't have a 20% lead to lose with this one Hamish.

cells

It doesn't say the UK is nothing without the EU it says GDP per household will be some 6% lower.

That 6% won't make or kill the UK but it's always nicer to get a 6% pay rise than a 6% pay cut

To me it sounds within the region of plausibility. My gut feeling is it wouldn't be that high and maybe closer to half of that.

Generali

cells wrote: »

It doesn't say the UK is nothing without the EU it says GDP per household will be some 6% lower.

That 6% won't make or kill the UK but it's always nicer to get a 6% pay rise than a 6% pay cut

To me it sounds within the region of plausibility. My gut feeling is it wouldn't be that high and maybe closer to half of that.

The thing is that it would be a 6% (or 3% or whatever) everything cut. If your GDP is 6% lower then that's 6% less spent on hospitals, on Political Correctness gone mad, on your and my incomes, on Aid, on education.

If you decide services are going to stay the same then that's more like a 10% cut in incomes as taxes will have to rise to fill the gap. If you want the state to take the hit rather than your pocket then that's more like a 15% cut in state-provided services.

Fella

BobQ wrote: »

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More project fear I imagine they will say but what is the point of employing experts to do studies if not to understand what could happen based on the available evidence?

Whatever expertise economists have is in understanding economics. Emphatically not on predicting what will happen based on that understanding. Hence why a roomful of economics experts gives you a room full of views.

Anyway we all know there was no possibility of the Treasury publishing any other kind of report here. There were two possibilities. The large possibility of a report like this & the very slim possibility of no report. There was zero possibility of a report saying that leaving the EU would benefit the economy.

michaels

Generali wrote: »

The thing is that it would be a 6% (or 3% or whatever) everything cut. If your GDP is 6% lower then that's 6% less spent on hospitals, on Political Correctness gone mad, on your and my incomes, on Aid, on education.

If you decide services are going to stay the same then that's more like a 10% cut in incomes as taxes will have to rise to fill the gap. If you want the state to take the hit rather than your pocket then that's more like a 15% cut in state-provided services.

Except that:
1) the economy is way more than 6% smaller than we would have predicted in 2007 and we have coped
2) for most people gdp per head matters more than gdp and the later will be more impacted than the former by brexit.

HAMISH_MCTAVISH

michaels wrote: »

the economy is way more than 6% smaller than we would have predicted in 2007 and we have coped

Yes but lets be honest it was a long and brutal 7 years for many. I don't think anyone is claiming the UK couldn't survive outside the EU. But Surviving is very different to Thriving.

You can argue all day long about whether it might be 5% or 6% or 7% cuts to GDP but every 1% has a real and measurable human cost.



At the very least, you're talking hundreds of thousands of people losing their jobs in the case of Brexit, and for the life of me there's not a single thing about Brexit I can think of that makes enduring such misery worthwhile.

Tromking

Shakethedisease wrote: »

Should be a bit careful about this sort of thing really. Every major intervention similar to this in the Scottish ref backfired and support rose. Not enough in the end to go over the 50% but the polls were nowhere near as close as is in the Eu polls just now. Remain don't have 20% consistent lead to play with this time.

A lot of undecideds will get really annoyed about being told forcefully and 24/7 that their country cannot possibly ever hope to cope without the EU.

The firm Remainers will lap it up. Those that are undecided might not like what's being force fed to them with these sorts of reports. Also, to have an impact, it should've been left till a bit later. They've left the Leave campaign and the media that support it, plenty of time to retaliate.

The mindset you talk of is pretty much where I am at the moment Shakey. Clearly there are some very clever people who feel that the 'Project fear' blueprint as enacted during the 2014 indref will work this time too. That said, I`m not so sure the English specifically will be so easily swayed and perhaps more importantly the warnings of economic armageddon in the event of Brexit are not so compelling as there were during the Scottish referendum.
I hope the Leave campaign major on the clear and present democracy deficit which our membership of the EU perpetuates. There is no remain argument that can argue that fact.

Generali

michaels wrote: »

Except that:
1) the economy is way more than 6% smaller than we would have predicted in 2007 and we have coped
2) for most people gdp per head matters more than gdp and the later will be more impacted than the former by brexit.

I don't think that the period where the 6% of GDP was lost was very pleasant for many: incomes fell and many jobs were lost.