ast week I wrote on the outlook for the UK economy in the year ahead without even mentioning Brexit once. This was not accidental.
Nor was it because of a suspicion that you are all bored to death by the subject (although you may well be). Rather it reflected my judgment that the Brexit negotiations will not play a major role in determining how the economy fares this year.
This may seem surprising. There is a widespread belief, fanned by parts of the media, that our economic fate hangs by a thread and if Brexit negotiations go badly then the economy could be in serious trouble.
This is completely misguided. Admittedly, the political world and the media world that lives off it will be on tenterhooks for much of this year. Each twist and turn of the negotiations will be reported and analysed ad nauseam. Yet the economy will trundle on much as before, whatever happens in the talks.
As I never tire of telling people, on the whole, political events have next to no impact on immediate economic performance. This is determined by much more humdrum factors such as the growth of incomes or changes in interest rates.
Similarly, the several serious political issues currently besetting the European Union, including Catalonia, the impending Italian election, the absence of a German government and the increasing alienation of Poland and Hungary, despite their long-term importance, are unlikely to dent the current expansionary phase in the eurozone economy.
This is not to say that the terms of Brexit are economically irrelevant. Rather, their impact on the economy will unfold over several years. And even the long-term impact is not mechanistically determinate. It will depend largely on the policy decisions that we make. Nevertheless, at the beginning of the year in which many of the issues surrounding Brexit will become clearer it is appropriate to take stock. What has the effect been? According to the Treasury, the vote to leave was supposed to send the economy into recession.
This turned out to be nonsense on stilts. Even so, according to Tony Blair, you can see the ill-effects of Brexit in everything from the crisis in the NHS to our poor productivity performance. I am surprised that he did not throw in recent extreme weather events for good measure.
To read Roger Bootle’s article for the Daily Telegraph in full, click here.