Douglas Carswell

06 JAN 2017

The trouble with the Treasury

Economists at Cambridge have produced a new report critiquing the Treasury's Brexit forecasts. It's well worth reading.

Here are some of the highlights:

1. The Treasury's use of data – or not:

"It was a serious weakness of the Treasury report that almost no evidence of the record of UK trade with the EU was included in the analysis."

2. The problem with forecasts:

"A model based largely on equations reflecting past relationships between macroeconomic variables has little to go on in attempting to project a long-term future outside the EU."

3. Overestimating the common market:

"It is a little known fact that Commonwealth markets have grown faster than EU markets since the UK's historic switch from the former to the latter in 1973."

4. Post-Brexit house prices:

"The provision of housing for migrants through the buy-to-let market pushes up prices and crowds out other potential buyers. With lower net migration after 2019 this pressure is expected to recede."

5. The real economic challenge:

"The economic outlook is grey rather than black, but this would, in our view, have been the case with or without Brexit. The deeper reality is the continuation of slow growth in output and productivity that have marked the UK and other western economies since the banking crisis."

Could this be the start of a constructive debate about Britain's future?

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