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Osborne

A few weeks ago, I looked at how the economy was performing compared to official predictions for the aftermath of a Leave vote. (NB – we haven’t left the EU yet but during the referendum campaign various warnings were issued of the immediate impact of simply voting to leave. Four months on we are in a position to judge their accuracy.)

Among other erroneous predictions, I picked out the forecast by George Osborne and the Treasury that a Leave vote would produce an “immediate” recession:

In his foreword to the Treasury’s analysis of the short-term effects of a Leave vote – released a month before the referendum – Osborne wrote: “a vote to leave would represent an immediate and profound shock to our economy. That shock would push our economy into a recession”. There’s no doubt whatsoever that he meant that the economy would enter negative growth immediately after the vote – Table 2.C in the same report predicts growth for this quarter, Q3 2016, of between -0.1 and -1 per cent.

At the time of writing that piece, the best evidence available was the Treasury’s own basket of independent GDP forecasts, none of which showed any sign of that predicted downturn.

Now, though, we have the official figures – and they show that the economy grew by 0.5 per cent in Quarter 3. That’s a gap of between 0.6 per cent and 1.5 per cent between that gloomy Treasury prediction and the reality. In short: they got it wrong.

There’s another positive sign in today’s news, as Nissan have announced they intend to produce the new Qashqai in their Sunderland plant, dispelling widespread predictions that production would be moved elsewhere in the EU.

There may yet be economic problems to come in the process of leaving the EU – no-one can know the future for certain. But what is clear is that the politicised forecasts issued as part of the referendum campaign need to be taken with a hefty pinch of salt.

57 comments for: Confirmed: the Treasury’s prediction of a Leave vote causing instant recession was wrong

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