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Bank of England gives Green Light to WTO Brexit

Summary:
The Bank of England's report: EU withdrawal scenarios and monetary and financial stability contributed to Hammond's predictions for Brexit but not in the way he must have hoped.  They actually showed that a managed WTO Brexit would have little effect on our wealth.The Bank's worst case scenario for a no-deal Brexit has had all the press attention but it was not about Brexit, it was about the Government.  The supposition was that the Government failed at every level of planning for a no-deal Brexit.  In fact did not really plan at all.Here is a list of the most disastrous events anyone in the Bank could imagine for a no-deal Brexit:Tariffs are introduced suddenly in Q2 2019 (no transition at all), EU does not recognise any UK standards but UK recognises EU standards, no trade deals

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The Bank of England's report: EU withdrawal scenarios and monetary and financial stability contributed to Hammond's predictions for Brexit but not in the way he must have hoped.  They actually showed that a managed WTO Brexit would have little effect on our wealth.

The Bank's worst case scenario for a no-deal Brexit has had all the press attention but it was not about Brexit, it was about the Government.  The supposition was that the Government failed at every level of planning for a no-deal Brexit.  In fact did not really plan at all.

Here is a list of the most disastrous events anyone in the Bank could imagine for a no-deal Brexit:

Tariffs are introduced suddenly in Q2 2019 (no transition at all), EU does not recognise any UK standards but UK recognises EU standards, no trade deals are signed for 5 years, there is maximum disruption to derivative markets, UK loses all existing trade agreements negotiated by EU, UK has no infrastructure to deal with border crossing, "fire sales" of commercial assets occur, bond yields are increased substantially, migration falls to 100,000 people leaving the UK pa.

It is, of course, possible that the government has really fallen down on its job so badly that no deal means no planning but we would expect at least a year's transition, mutual recognition of standards, allies already promising trade deals, infrastructure planning at ports. It is also unlikely that the EU would allow a collapse in derivative markets and 100,000 people would leave the UK with no-one coming in.

Even the Bank of England did not really believe the "worst case" scenario. Its scenario for an actual no-deal Brexit involves a transition period of 21 months.  Even though it is clear the Bank was trying to make a case for avoiding a WTO Brexit the outcome of this straightforward scenario is acceptable to anyone who believes in self government for the UK:

Bank of England gives Green Light to WTO Brexit
As in Hammond's presentation, much of the "fall" in GDP is actually due to lower migration - fewer people mean a lower GDP but don't mean you and I get poorer.  See Page 70 of the report: "net migration declines to 85000 by 2023" which is a reduction in population growth by over 0.3%. We all earn a similar amount per head but there are fewer of us so overall GDP does not grow.  Sensible governments will publish GDP per head figures rather than GDP figures after Brexit.

If we use the Bank of England figures for a fall in GDP of about 0.5% per annum plus a lowered rise in population by 0.3-0.5% per annum due to lower migration (see Population Growth) we get the following graph of GDP per head of population:

Bank of England gives Green Light to WTO Brexit
GDP per capita growth from World Bank Databank http://databank.worldbank.org/data/source/world-development-indicators
All those who support Brexit should cheer the Bank of England for showing in black and white that a managed WTO Brexit should involve no fear for us.

Notice that the "sour grapes" effect of the referendum, the "May 2016 trend", does not occur when we consider GDP per head, it is an artefact of slightly lowered migration into the UK, as can be seen from the decline in migrant workers from EU in 2017 below.

Bank of England gives Green Light to WTO Brexit

We should all start to get angry with the Bank of England and the European Movement (the leaders of Remain), they are literally treating journalists like ignorant fools who will just publish any propaganda they generate.

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