A new report claiming that damning Brexit forecasts are flawed is itself based on a series of errors, a leading economist has said.
A group called Economists For Free Trade (EFFT) released a document on Wednesday aimed at countering the gloomy outlook of Government reports leaked last month that suggested even the most optimistic Brexit scenario would lead to a two percent reduction in economic growth.
Armed with “a bit of detective work” and some “more positive assumptions”, four economists have concluded “that leaving the EU will boost the country’s economy by 2-4 per cent”.
Their conclusions were lauded by the pro-Leave Daily Express as proof “Project Fear” had been “THWARTED” because “civil servants put WRONG data into Brexit impact study”.
Speaking on BBC Radio 4′s Today programme on Wednesday morning, one of the report’s authors, Julian Jessop, said: “We’ve had to do a bit of detective work because of course the latest Treasury report hasn’t been published but we have worked out the model that they are using and we’ve basically taken the same model and made three important changes.
“First of all we’ve actually modelled what the Government policy actually is.”
The report states:
Let us summarise the benchmark trade policy assumptions of the Government as ‘general free trade [GFT] with the non-EU world’ plus a ‘close relationship with the EU’, such as ‘Canada +’. We can approximate ‘general free trade’ by ‘unilateral free trade’.
Jonathan Portes, Professor of Economics and Public Policy at Kings College London, told HuffPost UK this is an error, saying: “The Government has explicitly said its policy is not unilateral free trade, that’s just not true.
“Michael Gove has said that in response to a direct question. That’s just a flat out misstatement of the Government’s position.”
The second error Portes identified calls for the total elimination of non-tariff barriers and doing anything else would be “non-sensical”.
Portes added: “So they’re saying that the Government’s policy is GFT and that free trade means not just no Euro tariffs but no non-tariff barriers. Well, what are non-tariff barriers? Well us saying at the barrier ‘your sofa has to meet European fire safety standards’ or similar.
“What they are quite literally saying here is no safety standards, no environmental standards, no health standards, no food standards - nothing. On everything that’s imported.
“You could import literally anything to this country.”
Thirdly, the report also makes one other big assumption.
... we have assumed for the purposes of modelling that border costs are effectively zero.
This will not be the case but was apparently done for “simplification”.
A UK filled with dangerous goods and pollution-spewing vehicles seems to have reminded Portes of comments made by David Davis recently.
“This is literally a Mad Max Brexit that they're trying to model.”
Jessop sought to paint a rosy picture on Today, saying: “The key point here is we’re using the same model but we’re using more sensible and credible assumptions and we’ve come up with positive numbers rather then negative numbers.”
HuffPost UK asked EFFT three questions, the first of which was if their incorrect “credible assumptions” made their report null and void.
You describe failing to to eliminate non-tariff barriers as “non-sensical” but Gove has said the Government will do just that - doesn’t this make your report null and void?
Assuming they did do that, is a UK which imports pretty much anything without any consideration of safety and health standards no desirable?
Is assuming “border costs effectively zero” a sensible approach to modelling when there are bound to be costs associated?
Their response skipped the first question entirely, saying:
On the points you raise - non-tariff barriers are discriminatory whether standards or anti-dumping duties or quotas or threats of duties etc. Of course we will have standards - who does not?!
On costs of border we are simply using WTO rules which say they must be virtual except in rare circumstances. Also world bank data that shows for main developed countries almost 100% of border traffic goes physically unchecked.