I don’t hold much faith in forecasts by the IMF. They have been so wrong in the past as to be worthless. A week before referendum day in 2016, for example, the IMF predicted that a Leave vote would take 5.5 per cent off UK GDP by 2019, tipping us into recession in 2017. We’re still waiting.
However, it is interesting to note that if the Remain lobby does want to continue quoting IMF forecasts at us, there is an inconvenient little statement in its latest World Economic Outlook, published today. It claims that in the event of a ‘disruptive Brexit’ – i.e. Britain leaving without a trade deal – the EU economy, as well as the UK economy, would be deeply affected: “Under such circumstances, our concern is that economic growth will suffer, especially in the UK, but also the euro area. We are then possibly looking at appreciably lower growth than we presently project.”
This does somewhat undermine a favourite argument of Remainers: that we need to EU much more than the EU needs us, and that the EU can therefore afford to shrug its shoulders and say ‘suit yourself’ if Britain were to walk away from trade talks. The Remain lobby’s claim is that the EU’s trade with Britain makes up a far smaller proportion of the EU’s overall trade than Britain’s trade with the EU makes up of total British trade. While this may be true it also ignores the fact that EU exports to the UK outstrip UK exports to the EU.
Either way, it ought to be obvious that a ‘no deal’ scenario would affect some very powerful lobbies in the EU, such as French winemakers and German carmakers and that they are not going to want to sit by until March while Michel Barnier plays hardball with Britain, throwing EU exporters to the wall in order to make a political point. The reality is that Sir James Dyson was almost certainly right when he told Andrew Marr on Sunday that if we walk away from trade talks now, the EU will come back to us wanting to do a trade deal – this time without us agreeing to pay an absurd leaving bill of many billions. Trade deals have always happened because they are of mutual interest to both sides. This one will be no different.