The years of dire forecasts were not borne out by reality
He refers to IMF projections that have the UK economy growing a bit faster than the Eurozone economy for the next couple of years and then converging to much-of-a-muchness.
There was flurry of excitement at the beginning of the year when data showed an apparent collapse in UK exports to the EU. The lorries stuck at Channel ports may have been held-up by Covid controls as opposed to anything else, but the long-anticipated images were seized upon: the great Brexit disaster had arrived at last! But, as Münchau notes, the UK exports have “fully recovered”.
Of course it would be foolish to assume that it’s plain sailing ahead — or that British businesses aren’t experiencing difficulties already as a result of Brexit. However, Münchau’s focus is on the overall impacts of Britain’s decision to leave the European Union and why the dire predictions made by genuine experts (as well as the obvious propagandists) have not come to pass.
Münchau identifies three causes of this example of expert failure: firstly, “political capture” (the political establishment needed to win the referendum and official forecasters responded to that need); secondly, Brexit “drove some people to insanity” (and economists aren’t immune to political passions); and, thirdly, technical weaknesses in economic modelling.
But whatever the cause, isn’t there a case for holding the experts to account for the errors? After all, doesn’t talking down an economy have consequences? Five years of relentless, if largely baseless, negativity can’t do much for business confidence.
However, I doubt we’ll see many economists fessing up to their errors. It took the profession years to contend with its failure to predict the Global Financial Crisis of 2008 — and, arguably, the soul searching over that fiasco has been far from adequate.
Furthermore, as regards Brexit, there’ll be plenty of excuses.
Foremost among these will be Covid. The immediate and long-term economic impact of the pandemic is on such a scale as to overshadow any other factor — even Brexit. Furthermore, the fact that Britain has raced ahead of the EU on vaccination wasn’t something that any economic model could have factored in five years ago.
Except that the vaccine issue does illustrate the general benefit of a country being able to do things differently. This is something that was, and still is, greatly under-appreciated by the expert class — perhaps because, by their very nature, they’re talkers not doers.