Brexiteers like Daniel Hannan cling to any odd scraps of relatively good news (HERE) when he quotes reports by the World Bank that claim we would only lose 0.25% of GDP by trading with Europe on WTO terms. There is a lot of scepticism even on the Conservative Home website about this and some questioned why we need a free trade deal with anybody if the cost of going to WTO rules was so small.
I think the report he refers to is this one HERE by Hiau Looi Kee, described as a senior economist at the WB research department. Her report is about the short term impact of Brexit on UK exports. She claims:
I'm not an economist so it's hard for me to challenge it. But it's worth noting a couple of things. First of all the report itself says the "analysis does not consider some important aspects, such as services trade, ‘passporting’, and the role of London as a financial centre post-Brexit, or immigration and the social aspect of Brexit. The long-run impact of Brexit could depend on whether the UK can continue to retain and attract foreign direct investment".
Secondly, her pie chart shows 16% of our exports to the EU are "chemical products" which are produced in the EU under the REACH regulations or Registration, Evaluation, Authorisation and Restriction of Chemicals and if we leave without a trade deal in place chemical products made in the UK - a third country after Brexit - will not be authorised for sale in the EU. She does not seem to realise this. WTO rules will not help.
In other words it is a very incomplete picture, to say the least. The NIESR (National Institute for Economic and Social Research) a widely respected economic think tank produced a far more comprehensive report (HERE) in 2016. This describes the long term economic impact of leaving the EU. In table 1 they put the decline in total trade if we use WTO rules at somewhere between 20.7% and 29.2% and they conclude (page 9 - numbered 129):
"there would be no free trade with the EU in either goods or services. The larger loss in EU market share would also result in larger long-term declines in total trade of between 20.7 per cent and 29.2 per cent. The resulting declines in GDP relative to the 2030 baseline are projected to lie between 2.7 per cent and 3.7 per cent. Once again, the impact on households is projected to be stronger: real wages are projected to fall by 4.6 per cent to 6.3 per cent, while consumption is projected to drop by 4.0 per cent to 5.4 per cent, all relative to the 2030 baseline".
So, there is quite a wide variation. The World Bank says our trade with the EU will fall by 2% but the NIESR says 20.7% to 29.2%, about ten times as much. The WB say our GDP will fall by 0.25% while the NIESR says somewhere between 2.7% and 3.7% by 2030, again about ten times as much. But Mr Hannan never talks about the NIESR, I assume he thinks they are scaremongering.
This got me thinking. During the campaign anyone forecasting disaster to a greater or lesser degree was accused of being funded by the EU or were said to be stooges of Brussels. But after the vote went their way Brexiteers like Hannan are surely in a similar position with regard to potential bias, but far worse, are they not? They have invested huge amounts of personal and political capital in Brexit. Can they now be impartial? I don't think so, do you?
