27 October 2016
- Treasury had forecast best case scenario of -0.1% GDP in Q3 back in May, driven by flawed modelling, which also forecast wildly misleading long-term economic impact of leaving the Single Market.
- Treasury, the IMF and others must now come clean and admit that both long and short-term forecasting has significantly misled the British people.
- Economists for Free Trade forecast 2016 GDP growth at 2.3% - in line with pre-referendum forecast. Outside membership of the Single Market and embracing free trade on a global basis, the economy will continue to prosper.
Following the release of GDP figures today, Economists for Free Trade issues the following statement.
Ryan Bourne, member of Economists for Free Trade and head of public policy at the IEA, said:
“Ahead of the referendum, the Treasury forecast an economic contraction in Q3, the IMF forecast a crash in equity markets and the Treasury warned of a technical recession. These were just a selection of wildly inaccurate short-term forecasts based on the poorly-evidenced effects of supposed policy ‘uncertainty’ and expected lower growth potential outside the EU. Similar analysis now drives the prediction of long-term economic suffering outside of the Single Market.
“With referendum campaigning complete and evidence these forecasts were utterly inaccurate, now is the time for humility from these institutions. The Treasury forecast came largely as a consequence of dodgy assumptions about Britain’s future policy framework outside the EU. The new Chancellor Philip Hammond now has the opportunity to disavow this flawed modelling and to reassess how Britain might fare outside of the Single Market under realistic assumptions on trade and regulation.”
Professor Graeme Leach, member of Economists and CEO & Chief Economist of Macronomics, added:
“Through its research, Economists for Brexit has consistently stated that the UK economy will be considerably better off outside the protectionist customs union. All significant indicators show the economy having a strong head of steam going into the vote and a positive recovery in the weeks since, with GDP figures in particular demonstrating that uncertainty has not undermined economic performance. It is therefore troubling to see the Treasury wedded to a set of forecasts which see the UK economy shrinking in relative terms over the long-term, based on entirely misleading assumptions.
“Put simply, we need a broader and better understanding of what free trade outside the EU actually means for the UK economy, to better inform Government policy.”
Economists for Brexit, which includes four former economic advisers to government and six university professors, advocates leaving the EU and embracing global free trade.
Professor Graeme Leach is CEO & Chief Economist of Macronomics, a macroeconomic, geopolitical and future megatrends consultancy. He was formerly Director of Economics at the Legatum Institute, and Chief Economist & Director of Policy at the Institute of Directors (IoD).
Ryan Bourne is head of public policy at the Institute of Economic Affairs. Having previously worked for the Centre for Policy Studies and Frontier Economics, he has written widely on a range of economic issues.