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29 November 2018

Will the Bank of England’s forecasts be enough to avert a no-deal Brexit?

The economic predictions don’t worry Brexiteers, but will they sway Remainers amid the uncertainty over revoking Article 50?

By Stephen Bush

The Bank of England have released their forecasts about how the various Brexit outcomes will play out: in the best case scenario, a hit to long-term growth, and in the worst, an immediate and severe plunge in GDP, increased interest rates, statues to cry, the sun to swallow the sky, etcetera.

It’s a reminder of the enduring damage that George Osborne’s sensationalist presentation of the Treasury’s predictions during the referendum have done. Just as no doctor can tell you how much you’ll weigh next year but can predict with a reasonable degree of accuracy that you will be heavier if you live off fried food and cream cakes than pulses and steamed fish, yes, no one can be sure how Brexit will play out. But we can say with a reasonable degree of accuracy that less trade and more friction – whether in the form of new tariffs or of regulatory, non-tariff barriers – will lead to a smaller British economy than we’d otherwise have.

Of course, the arena where these predictions really matter is Westminster: do they move the dial as far as Theresa May’s tricky path to passing the withdrawal agreement into law go? We know that they don’t worry committed Brexiteers in either party, but thanks to the general low regard that economic forecasts are currently held in, they don’t provide an easy excuse to facilitate a U-turn from anyone else, either.

What about the audience that might be swayed by all this: Labour MPs? They’re also the audience that Jeremy Corbyn’s amendment to the agreement is designed to win over. The difficulty for May is that a lot of wavering Labour MPs will have nodded along to Yvette Cooper’s words to the Prime Minister this morning: that May is not “the kind of person who can contemplate no deal” and would “take action to avert it”. The problem is that it is not clear what that action would be and what May’s unfettered power to take it would be.

It all hinges on how the process of revoking Article 50 works. Whatever the provisional verdict on 4 December is – a non-binding but indicative update on the European Court’s thinking before a full verdict is reached – will have huge implications for what happens next.

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