The leaked government Brexit forecasts have this morning been reported by the BBC just as its leakers intended: as embarrassing proof that Brexit is bad for the economy. If it had any vague interest in being impartial, perhaps the Beeb would have bothered to make the rather obvious point: not only have we seen such forecasts before, but the new figures are more optimistic than HM Treasury’s last effort.
The government’s April 2016 analysis said that the economy would be 3.8 percentage points smaller than it otherwise would have in 15 years if we were to stay in the EEA; that has now been revised down to a 2pc hit. With a free trade deal outside the single market, the Treasury’s initial guess was a 6.2-point hit; it has revised that to 5 points. And a no-deal scenario (or WTO) has been revised to 8 per cent, up from 7.5pc.
But the biggest question ought to be: how reliable is the analysis anyway? The Treasury’s short term analysis of the impact of a vote to leave forecast that between the EU referendum and now, cumulative GDP growth would be at best 0pc and at worst -2.2pc. But the economy has actually grown by 2.8pc. Again, don’t expect any BBC outlet to tell you that.
And unemployment? How might that change as a result of a vote for Brexit (as distinct from Brexit itself)? The Treasury’s April 2016 report offered two scenarios: up by 480,000 or by 510,000 by early 2018. Look at its ridiculous graph, below
In fact unemployment has now fallen by some 250,000, and now stands at its lowest level since the mid-1970s. Not content with its absurd claim, the Treasury saw fit to break down this non-existent unemployment by region. Have a look at its conjecture, of which absolutely none has come to pass:-
So, the Treasury Brexit analysis was nonsense then – and it’s nonsense now. As its April 2016 study showed, macroeconomists struggle to predict one year ahead – so how much faith should be placed in their view for 15 years’ ahead?
The most damaging part of today’s leak was that, after the Treasury’s Brexit forecasts were proved so utterly wrong, someone in the government thought it worthwhile asking the Treasury for its opinion once again.