Britain Analysis: How to Ignore Economic Issues in the EU Referendum


PHOTO: British Prime Minister David Cameron puts out his message about the cost of Brexit — but is anyone listening?

With a month to go before Britain’s referendum on European Union membership, one of the notable features of the debate is the Leave campaign’s avoidance of the economic consequences of a No vote.

It is not difficult to explain the political strategy. Because the Brexit camp has no effective response to the near-universal studies of the damage to Britain’s GDP, trade, and investment, it is trying to shift discussion to other general areas such as sovereignty and immigration. The effort is so pronounced that a leader of Leave, outgoing Mayor of London Boris Johnson, has preferred criticism of the “part-Kenyan” President Obama and comparison of the European Union to Hitler and Napoleon.

See Britain and Europe Analysis: “Brexit” Attacks President Obama…and Avoids the Issues

The strategy might work. Possibly because economic matters are complex, they might not receive the headline attention given to a shock headline about migrants flooding Britain or a supposed EU takeover of the United Kingdom. Latest polls show the refendum’s outcome is in the balance, with Remain holding a 4% lead — within the margin of error — over Leave.

Simon Wren-Lewis writes for The Conversation:

Two issues dominate the EU referendum debate: economics and immigration. When it comes to my field of economics, polling evidence suggests that if people became convinced that they would be worse off by leaving, even if it was by quite modest amounts such as £100 a year, the majority voting to remain would be pretty large. Studies by economists at the highly respected London School of Economics, National Institute of Economic and Social Research, the Organisation for Economic Co-operation and Development and the Treasury all suggest that on average we would be worse off by an amount that is more than ten times that £100 figure.

Yet the polls still suggest the result will be pretty close. Indeed, voters seem unconvinced that they will be considerably worse off if Britain leaves the EU. They see claim and counter claim. The BBC has reported a study endorsed by eight economists, two of whom are academics, that we would in fact be better off leaving. To the casual observer, it might seem that we have economists disagreeing with each other as usual.

Contrast this with a letter organised by me, Tony Yates, professor of economics at the University of Birmingham, and Paul Levine, professor of economics at the University of Surrey. Published in The Times, we gathered 196 signatures (which has since risen to more than 200), most of whom are academic economists. On the costs of leaving the EU it said: “The numbers calculated by the LSE’s Centre for Economic Performance, the OECD, and the Treasury describe a plausible range for the scale of these [Brexit] costs.”

You will never get unanimity in economics. It is a science about people and therefore inherently uncertain, and the views of a few economists are influenced by their politics. Getting so many academic economists – fairly quickly with not that much effort – to endorse studies that said there would be large costs to leaving is therefore pretty significant. It’s perhaps one of a relatively small number of issues where most economists are not divided.

Skipping Over News

Although The Times gave the letter a good write-up, virtually no other news organisation reported the story. The response of most journalists to this omission is very simple. Our letter was published on the same day that the Bank of England released its monthly inflation report, and their press conference was all about the short-term costs of a decision to leave. Our letter, even though it complemented that story – supporting the projection that Brexit will be bad for the economy – was squeezed out. It could not be covered subsequently because it then became “old news”.

In retrospect, perhaps we could have sold the story better. We could have researched what days to avoid. We could have directly alerted specific journalists about its publication. Was our PR so bad that we should submit ourselves to more media training?

Maybe not. We understand that in today’s media environment it is naive to think that journalists have a lot of time to investigate and coverage is largely dictated by an ever-shifting news agenda, which is one reason why Tony and I write regular blogs. There is also an opportunity cost for academics in cultivating contacts or working out the best day to release news.

But there is something rather worrying about a world in which the ideas that get across to policymakers or voters are the ones put forward by academics with the best PR. Should voters be denied the knowledge about the overwhelming consensus of academic economists on Brexit just because our letter was published on the wrong day?

Of course, this raises important issues for those who select what is news. But it is too easy and complacent just to blame the media.

An Academic Question

Academics are increasingly having to compete with think tanks that are often little more than the mouthpiece for wealthy individuals and organisations, and their PR is always going to be better. In macroeconomics, we have City economists whose job it is to get media exposure, and who, on important issues such as austerity, do not reflect the academic consensus.

The days when we could assume that an academic position gave your expertise any kind of advantage over those of a think tank employee or a City economist have long gone – if they ever existed. What I have called the knowledge transmission mechanism – the means by which academic knowledge gets to policymakers and voters – is becoming weaker. And, as climate scientists have discovered, this is not just a problem for social scientists.

On crucial issues such as Brexit, we need to find a better way of getting across the views of the majority of academics than simply writing letters to newspapers.

The Conversation

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  1. It was never about economics, any more than the Scottish National Party is about economics. It is about freedom and independence, and not being ruled by unelected bureaucrats.
    If the EU Constitution was like the US Constitution, things would be different. But it is turning into a Napoleonic empire.

      • BTW – on this level of the debate Britain should leave. You can discuss a subject rationally like the scottish referendum some time ago – or one can use bullshit pseudo arguments like Johnson. It`s because he feels that he will loose?

        However, pundits are warning that those voting for schism may get even more of one than they imagine.

        If the country does vote for a Brexit, it will set in motion a process to legally extract the UK from the institutions of the EU. In so doing, the pace of change could snowball, reawakening calls for independence in Scotland, Northern Ireland and elsewhere in Europe.

        The new scottish referendum after a possible Brexit is sure – but if the fronts at northern Ireland will explode again it will be a real tragic story.

        1..Brexit poll tracker Finacial times at the 19.may 2016
        stay 46%
        leave 40%
        2..Brexit Referendum Betting Odds
        stay nearly 60 %
        leave 40,7 %

  2. The Vote Leave Campaign said that they are not advocating the ‘Norway option’ and that,
    “After we vote leave, we will negotiate a new UK-EU deal based on free trade and friendly co-operation.

    We will end the supremacy of EU law. We will bring back control including over trade deals and migration.”
    1.. No way – if UK leaves the EU if a norwegian – style relationship ore any other – it would still be bound by great swathes of the EU regulation that rankles with businesses and the general public, but – and this is the crucial point – without any vote on it.

    After a possible Brexit UK is more dependent on EU laws than before.
    2..If Britain is going to take the Norwegian model: Despite lacking voting rights and full participation in the EU institutions, Norway must still make a sizeable contribution to the EU budget. Looking at its recent contributions, Norway pays €656m to the EU but gets back around €100m in science and research grants, which makes a per capita net contribution of €107.4. In contrast,
    Britain’s net contribution of around €9bn works out as €139 per capita.
    resumen: EU free movement of people is central to Norway’s relationship with the EU
    As a member of the EEA, Norway must apply the same free movement rules as EU member states, but has no vote on the rules. In Norway’s experience this actually results in far higher inward EU migration than the UK, when measured as a percentage of the countries’ total populations.
    3.. A new contract between EU – Britain does not come out of the hot air – it will be surely a relationship between Switzerland – EU ore Norwegian – EU. Why should EU treat Britain any better than Switzerland or Norwegian?
    4..Surely Britain after a Brexit will try to make good deals – understandably. To deal with EU will be more expensive than before (Norwegian model) and trade tariffs. If Britain will not accept EU Standards it has to accept US Standards or what whatever because the british market is far to little to have the economic power to set rules.
    5..The EU is still the UK’s largest trading partner, with 45% of UK exports going to the continent. The London-centric financial services industry has a large trade surplus with the EU, and is probably at the greatest risk from an EU exit.

    One of the primary benefits to global financial firms of locating in London is that a company regulated in the UK is ‘passported’ into Europe. If this passporting is lost, these firms will decide to relocate. Deutsche Bank recently said it would consider relocating some of its UK operations to Germany if Britain leaves the EU.

    6..This isn’t just about London. Exports to the EU account for 13.4% of the gross value added of the North East of England, for example; and EU trade generally makes up a greater proportion of the least prosperous regions’ trade. Furthermore if an EU exit resulted in the imposition of trade tariffs, it has been argued that it could lead to a reversal of foreign direct investment, for example in the automotive industry. (Nissan in Sunderland, Honda in Swindon, cooperation with BMW)

    If there is one thing financial markets abhor, it is uncertainty. And surely the next years after a Brexit will bring much uncertainty – because it`s not possible to make new rules, new regulations and new trade contratcts in a short period of time.

    If you look to TTIP it takes years until the contract will be completed.
    But the important point is: No one will be interested to make comparable treaty with UK – because it`s to little.
    It`s certain that it will be economical not easy for UK after a Brexit and it will change british politics, too because Britain has to search new markets and possibilities. It would be understandable if Britain makes
    concessions to the Russian Confederation because at Russia Britain will find anything that it will need because Putin would be very interested to take this lifeline and Putin will make any concession to make this possible.
    But If so we are at the same point as 102 years ago – before 1914. European countries will again become competitors and together with Nationalism it was the ground work for the two worst wars the world has ever seen.
    That`s why the European Union was founded.

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