POLITICS

Economist Who Claims £135billion Hard Brexit Boost For UK Guilty Of 'Violence To Basic Facts Of Economic Life'

"Laughable".

21/08/2017 15:12 | Updated 22 August 2017
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Claims that UK will be £135billion a year better off after Brexit are “laughable”, according to a former top Government economist.

Jonathan Portes, former Chief Economist at the Cabinet Office, tore apart suggestions from anti-EU academics the UK is set for a huge boost after Brexit. 

The claims were made by the Economists for Free Trade group, which also predicts an eight per cent fall in prices in the event of a Hard Brexit if the Government were to quit the EU without a deal.

Portes took to Twitter to pour scorn on the report, suggesting the group – which includes leading Brexit economist Patrick Minford – made basic and fundamental errors in their research.

It is not the first time the work of Patrick Minford has been torn apart by fellow economists.

In 2016, the Professor of Applied Economics at Cardiff Business School argued leaving the EU would raise the UK’s welfare by four per cent as a result of increased trade – mainly through abolishing tariffs on all imports.

The policy, known as ‘Britain Alone’, was savaged by The Centre for Economic Performance at the London School of Economics, which suggested Minford’s work disregarded 40 years of established theory.

Here are some of the most brutal takedowns of ‘Britain Alone’:

On unilaterally abolishing all tariffs:

“As far as we know, no developed country has ever unilaterally removed all manufacturing tariffs against all other countries.”

On claims prices for goods and products would fall by 10%:

“How on earth can trade costs fall by 10% when the UK’s average tariff is currently around 3%?”

“The estimates he makes are from data in 2002 - 14 years out of date.”

“The entire exercise is deeply flawed empirically and conceptually.”

Minford doesn’t understand what the Single Market is for:

“The basic misconception in Minford’s world is that the harmonisation of regulations between EU countries to reduce trade barriers is simply a pernicious plot by vested interests to raise prices. In fact, playing by a common set of rules is what helps increase trade and competition in a modern economy. Modern trade agreements are hard because countries are trying to agree on common standards and to harmonise rules that are different.”

Minford doesn’t use the ‘Gravity model’ of trade, which recognises countries geographically close to each do more business:

“Minford uses an old trade model in which all firms in an industry everywhere in the world produce the same goods and competition is perfect so that trade does not follow the gravity equation.”

Minford is decidedly old school:

“Minford’s style of work was popular in some quarters in the 1970s. In those days, economics did not need to be well-grounded in facts and data, and could rely on highly simplified theories.”

On Minford’s ‘Liverpool Model’ for predicting economic outcomes:

“Building a model that does such violence to basic facts of economic life is why the ‘Liverpool model’ has such a poor record of accurately analysing major policy changes.”

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