It is a month after Britain’s surprise vote to leave the EU.
A new Conservative Prime Minister and Chancellor are in place, both David Cameron and George Osborne having fallen on their swords. The third man in the losing triumvirate, Mark Carney, is still in office. Having taken a political stance in the pre-referendum debate, there can be little doubt the post-referendum fall in sterling was considerably greater than if he had kept on the side-lines.
This article takes to task the Treasury’s estimates of the effect of Brexit on the British economy and Mr Carney’s role in the affair, then assesses the actual consequences.
The Treasury’s economic weapons of mass destruction
One of the Treasury’s models predicted Brexit would cost each household £4,300 every year. There were at least two things wrong with this prediction. Firstly, it was presented as if it was a loss of net income, in other words the business profit or wages the average household would lose. The estimate was nothing of the sort, it was the Treasury’s estimate of the loss of annual GDP divided by the number of households in the event of Brexit.