Defending George Osborne on Brexit once again

When a good part of the electorate are in cloud cuckoo land, you may have to leave planet earth to talk to them.

Economists are pretty certain - as certain as they ever are - that Brexit will reduce medium to long term growth relative to staying in the EU. A large section of the UK public either do not know that, or do not believe them. They have been told, in some cases by people that should know better, that these assessments by economists are ‘just another forecast’. They are told that economists cannot forecast one year ahead, so how can they possibly know what will happen in 10 years time. [1]

Against this they have the certainty that you cannot control EU migration from within the EU. They feel intuitively that austerity was the right thing to do, and the government confirms this, so the pressure they see on public services must be due to immigration. The papers they read say this day in and day out, and never mention that migration helps the public finances. And then there is the money - however much it is - that we would certainly save by not paying into the EU budget.

As a Chancellor you know this is fantasy. You know the OBR will take account of consensus opinion after Brexit and revise down their projection of UK trend growth over the next decade or two. You know that will inevitably mean lower tax receipts, so you will have to raise taxes or cut spending at some point. But you also know that if you try and add realism, by saying this might not have to happen immediately (and should not happen immediately if Brexit causes a short term recession), you just muddle the message. So to bring home to people this is not just ‘another forecast’, you talk about an emergency budget immediately after Brexit.

Is that scaremongering? Well it is not in the same league as pretending we will soon be ‘flooded’ with Turkish migrants because they are about to join the EU.

When Jeremy Corbyn was asked how he rated his enthusiasm for staying in the EU out of 10, he said 7 to 7.5. It was an honest answer. But the general consensus was that it was not a good answer in terms of the politics of the moment. He needed to send a ‘clear message’ that we needed to stay in the EU, and so should have avoided answering the question. All this makes me glad I’m not a politician. But as far as George Osborne is concerned, I think he just sent a ‘clear message’.

[1] Just in case it needs spelling out, assessments of the long term impact of Brexit are counterfactuals, or conditional forecasts. Of the ‘if the supply of apples falls, their price will go up’ kind. They are much less uncertain than the unconditional forecasts about what will happen to inflation and growth in a year or two.