Saturday 15 April 2023

Economists arguing against reality

There is a determined bunch of economists and commentators who are desperate to keep the Brexit 'dream' alive and continue to push back against the growing mass of evidence against it. Robert Kimbell is one, Julian Jessop is another. They are constantly arguing against received wisdom and the combined gloomy forecasts of the OBR, the IFS, IMF, OECD, and just about every other reputable body of economic thinking. They give an air of legitimacy to the wilder reports of The Daily Express.  Unfortunately, the work is becoming more and more difficult.

Their latest attempts concern UK trade, which all evidence, both anecdotal and academic shows is falling. Here is Kimbell being taken to task for 

The thread explains how Kimbell is selectively using helpful dates to 'prove' a point and also giving figures which are not adjusted for inflation. It also points to a peer-reviewed academic paper showing that Britain's trade with the EU has been badly hit. There are ONS figures, adjusted for inflation that show UK exports to the EU are not even back to 2015-16 levels.

Kimbell is also selective in which forecasts he believes. The same person takes him to task for firstly using IMF figures to support his own arguments before trashing it when it produces numbers he doesn't like:

I also draw your attention to Julian Jessop who also tweeted about trade:

Note he is admitting that increased barriers "will" hurt trade with the EU. But this isn't what he said last October in what was billed as a "major report" into the impact of Brexit on the UK economy. It was jointly written by Graham Gudgin, Julian Jessop, and Harry Western (a pseudonym BTW).

In it, they write:

"Far from collapsing as some claim, UK trade with the EU has fully recovered after some initial disruption, despite increased trade frictions. Underlying trade levels are close to long-term trends. The UK’s trade balance with the EU has improved – implying a boost to growth – and even sectors like food and fish have seen exports to the EU proving remarkably resilient."

You can see the latest (inflation-adjusted) ONS figures for goods exports, both EU and non-EU, below. It looks like they are both falling gently, and this is against world trade which is rising Here:


The ONS bulletin also says:

"The total trade in goods and services deficit widened by £2.3 billion to £23.5 billion in the three months to February 2023, as exports fell by more than imports.

"The trade in goods deficit widened by £0.9 billion to £61.3 billion in the three months to February 2023, while the trade in services surplus narrowed by £1.4 billion to £37.9 billion."

Imports from the EU are rising while exports are falling which aligns with logic, most reputable forecasters, and the actual lived experience of most exporters. They are arguing against reality - and will eventually lose.
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