So, the OBR is telling us that Brexit blows a hole in the public finances. Some differ:
Britain’s official economic forecasts are regularly wrong and should not be taken seriously when they predict a negative impact from Brexit, according to Boris Johnson’s former economic advisor Gerard Lyons.
“The margin of error on these budget forecasts is very high. They are sensitive to economic forecasts and also, as the OBR itself has previously stated, its judgment on fiscal policy,” he said in a letter to the Daily Telegraph.
“The ‘cost of Brexit’ highlighted in the Autumn Statement will undoubtedly be wrong.”
Yes, that’s obviously true. Apart from anything else there’s spurious accuracy in there. Even if we knew all the effects and knew their size, could calculate them, there would always be uncertainty, a range for each of them, yet the final result is a point result. Just cannot really work out that way. But more than this:
Dr Lyons, who was chief economist at the global bank Standard Chartered and is now chief economic advisor to the think-tank Policy Exchange, said his own research shows Brexit should be good for the public finances.
“My detailed research shows that leaving the EU and taking a global approach produces higher growth and more employment than remaining in an unreformed EU,” he said.
“Far from a cost, Brexit is more likely to produce a significant gain.”
There’s nothing wrong with either Choate or Lyons as economists. Both are rather good ones in fact. But we’ve got an argument here not just about the size of the various effects but even the sign!
And that’s what puts paid to the little fantasies of the likes of the Spudmonster. We simply cannot plan the economy at the sort of level of detail he desires to tinker because we cannot even calculate the economy at that level of detail. Something as basic as Brexit we really don’t know whether, in macroeconomic terms in the medium term, it is positive or negative. How in buggery can we plan therefore?