September 5, 2017

Ditch Project Fear for Project Prosperity

Ditch Project Fear for Project Prosperity

Professor Tim Congdon argues post-referendum economic data has dispelled Project Fear, which is why he and fifteen other leading economists are calling for the Brexit pessimists to get on board with Project Prosperity. 

Remember the three-million-jobs-at-risk claim that was central to the economic case for remaining in the European Union. It originated in a 1999 report from the National Institute of Economic and Social Research, which observed that “up to 3.2 million jobs are now associated directly with exports of goods and services to the EU countries”.

The Britain in Europe group, a cross-party ginger group launched by Tony Blair, Kenneth Clarke and other bigwigs, rejigged the National Institute’s words so that three million jobs “depended” on EU membership. This evolved on restatement to something much more spine-chilling. Nick Clegg’s formula in a Daily Telegraph story of 11th January 2013 was that three million jobs were “dependent on our position as a leading member of the world’s biggest borderless single market, you play with that status at your peril; there are jobs at stake, livelihoods.” He warned that leaving the EU meant isolation, and that “isolation costs jobs, costs growth, costs people’s livelihoods”.

Britain remains for the time being an EU member, and Blair, Clarke, Clegg & Co. might argue that a true test is yet to come. But forecasts of an early recession and heavy job losses were certainly part of Project Fear, both ahead of and in the immediate aftermath of the EU referendum on 23rd June 2016. The doom-mongering was as much about what would happen just after a majority vote to leave as it was about the sequel to Brexit proper. The Financial Times might be seen as the intellectual leader of Brexit pessimism and its economic commentator, Martin Wolf, as its foremost Jeremiah. His judgement, less than a week after the referendum result, was that, “I would be very surprised if we don’t have a year or two or three of a real recession.” He also sneered at the Brexiteers’ “mendacious campaign”.

That is why a group of sixteen leading economists – including myself – is calling for the UK’s Brexit pessimists to ditch Project Fear for Project Prosperity by seizing the Brexit boost of as much as £135 billion a year unlocked by leaving the protectionist bloc. Economists for Free Trade point out that this can be seized by quitting both the single market and the customs union – adding to the positive economic news we have already had since the referendum.

We have not yet had two or three years since 23rd June 2016, but we have now had over a year, and we also have almost a year of official employment data. If the three-million-jobs-at-risk proposition were even a quarter correct, and if “a real recession” were indeed attributable to leaving the EU, something ought to be evident by now in the numbers. So what does the 12th July 2017 Statistical Bulletin on the ‘UK labour market’ from the Office of National Statistics say about the situation?

Let us start with employment. In the year to the three-month period from March to May employment increased in the UK by 324,000 people from 31,686,000 to 32,010,000. Yes, it increased. It did not go down, as the pro-remain politicos and pundits said it would. Moreover, the rise in employment was higher in this twelve-month period than on average (266,000) in the 25 years from 1992, which is the first year reported for this series in the present ONS database. Since the referendum not only have jobs been created, but the rate of job creation has been better than normal over the last generation.

What about unemployment? The Brexit pessimists might have a case of sorts if the above-normal rate of job creation had occurred in a slack labour market, with many disappointed job-seekers. But that is not the reality at all. On the contrary, the unemployment rate reported in the 12th July ONS release was 4.5 per cent. This was the lowest – repest, the lowest – in the 25 years for the unemployment rate series in the ONS database, as that database is currently available. The statistics on vacancies tell the same story. As is well-known, the official vacancies figure understates employment opportunities in the British labour market, but the figure is still a valid indicator of job availability. Here the official series is shorter than for employment and unemployment, and starts in 2001. Anyhow vacancies in April-June this year stood at 774,000, just a smidgeon (4,000) down on the previous month, but the totals for the two months were the highest in the 16-year period under review.

Now that over a year has passed since the Brexit vote, it does make sense to recall statements made in the debate, and to check who has been right and wrong. Has even a fraction of the three million jobs allegedly at risk actually disappeared in practice? We may be only a year into Wolf’s “a year or two or three”, but can a “real” job-destroying recession be found in the official record? Has the start of Brexit negotiations led to the “isolation” of Britain, and hence to heavy costs in jobs, livelihoods and growth? The answer to all three questions is “no”.

It is vital that the message is sent out that Project Prosperity is here to stay – and that is exactly what Economists for Free Trade proposes to do. With the Brexit boost that can be achieved by ditching the protectionist prison of the EU and embracing global free trade, a dividend worth about £5,000 per year to families across the country accompanied by an 8 per cent fall in prices tells us that the cost of watering down/avoiding a clean Brexit would be calamitous.

The arguments between the Leavers and Remainers are not settled yet. Perhaps a decade of post-2016 (or post-2019) experience and information is needed. But the first round in the debate about jobs – so prominent in the pro-EU campaign – has gone, clearly and decisively, to the Leavers. Will the EU’s supporters have the courtesy to acknowledge that? And can we have less from Martin Wolf and others about Brexiteers’ supposed “mendacity”?

4.67 avg. rating (92% score) - 9 votes
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Professor Tim Congdon
Professor Tim Congdon is the founder of Lombard Street Research and previously a member of the Treasury Panel of Independent Forecasters and one of the “Wise Men” between 1992 and 1997 who advised the Chancellor on economic policy.
  • Jolly Radical

    The Professor seems to believe this is an old-fashioned honest debate.

    He must be unaware of the real agenda of the FT/BBC globalists.

  • David Kane

    Mass Muslim immigration came to Britain when Blair’s Labour Party threw open our borders and told the electorate that this would be good for the economy and that immigrants would pay for our pensions and welfare state. If that were the case surely the economy would be booming now after 20 years of demographic change? A look at the latest Treasury statistics on UK borrowing make sobering reading. The deficit climbed to £6.9bn in June, up £2bn compared with June 2016. In this financial year so far the government has already borrowed £22.8bn, a rise of £1.9bn on the same period of last year. The national debt now stands at £1.75 trillion, when excluding the bank bailouts, which is equivalent to 87.4pc of GDP, a record high and makes Britain the biggest external debtor nation in the whole world. Politicians of all hues are quick to pounce on “rich pensioners” with their triple lock and bus passes and free TV licenses as a solution to this debt. What pensioners get from the state is transparent and revealed each year as part of the statistics produced each year showing who gets the biggest slice of the welfare cake, which this year will be more than £140 billion. Yet here is the biggest elephant there has ever been in any room, Muslim welfare payments. Ask the DWP how much of the welfare cake Muslims consume and you will never get an answer other than the stock PC response that statistics based on ethnicity or religion are not released. According to (modest) numerical calculations based on government statistics from wikileaks and a leak from Ritt Bjerregaard, the Danish Socialist spokeswoman for immigration and integration (1999), the following conclusion was arrived at. Muslims, who in 1999 made up 5% of the Danish population, were receiving 35% of all welfare payments. Britain has a similar ratio of Muslims in its population to Denmark and an equally generous welfare system so we can estimate, as has migrationwatch and The Daily Telegraph, that Muslim welfare benefits clock in at just short of £50 billion each year and counting (thanks to an average family unit of 6 children compared to the UK average of 1.2), far more than that “given” to pensioners who, unlike Muslim immigrants, accrued their benefits with PAYE contributions. There’s someting rotten here, and it isn’t just in the state of Denmark. The Government’s tax haul may be on the rise as the economy grows – so far this financial year current tax receipts have come in at £164.2bn, up 4.7pc on the £156.8bn raised last year but total current spending has risen by 5.6pc to £176.7bn, so the Government has had to borrow more to plug that widening gap. Financing the debt cost £4.9bn in June alone, a rise of more than £1bn from £3.7bn in the same month of 2016. We are literally borrowing to service a lie, without Muslim welfare payments Britain would have NO annual borrowing requirement and the national debt could begin to come down. Muslim welfare payments are literally bankrupting Britain but the public are not allowed to know (read: “2030: Your Children’s Future in Islamic Britain” by David Vincent, Amazon and Kindle), I would urge all of you reading this to send in a Freedom of Information request to the DWP and ask them the same questions and see how far you get on the biggest X-file in British history.

  • Nockian

    It’s not really an economic argument anyway, it’s a philosophical one, in which economics plays a role. The fact is that all countries with greater freedom from central state controls have increased prosperity, but that is an incidental result of greater freedom-all be it a welcome one.

    The EU is a stifling centralised bureacracy similar in nature to the great authoritarian states of the USSR, N”zi Germany and China. The common man feels it, even if he cannot put it into words he grasps his individuality is being smothered by a big brother and his voice has been gagged. He sees the incidentals such as the fracturing health service, the money thrown at refugees, his living standards beginning to approximate those of the cultures who swamp his living space. He sees his sons and daughters emerging from a failed education system with massive debts, few prospects of a good job and no opportunity to buy/rent their own property. He sees his saving diminished by globalist central bankers who destroy the honest pound in his pocket that he sweated to earn. He hears the dismissive language about his white privilige, his stupidity and the accusations of racism and mysogeny from far left thugs and now from members of parliament who are supposed to represent him.

    The common man doesn’t know what is happening, but he knows it isn’t good and he wants to send a message to those who won’t listen to him, who deride him, who push him into ghettos and call him bigoted and stupid. He wants to tell them he has had enough of their over bearing attitude and to have his voice listened to. The Government can pretend and extend all they want over the EU, but if conditions don’t change-not necessarily improve financially-for this ordinary man, then democracy has failed and then what need will he have for the laws and polling stations ?

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