Time to bust the No Deal myths

Leaving the EU without a formal Withdrawal Agreement does not mean ‘crashing out’ or ‘jumping off a cliff’, or any of the other pejorative phrases about the possible economic consequences. All leaving means, economically speaking, is that Britain will no longer be trading with, and its businesses connecting with, other EU countries on the terms set by the rules of the EU Single Market and Customs Union. This was always going to be the consequence of implementing the Brexit vote.

Government and businesses, as well as individuals, could and should have been preparing for that change ever since 24 June 2016. If, in places, this has not happened yet, that cannot be blamed on the Leave vote itself. It comes from the paralysis engendered by a collective fear of change. Since the 1980s a profound attachment to the status quo has taken hold in the Western world, which has taken many forms: in this instance, it is an attachment to the supposed comfort blanket of EU membership.

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The economicisation of a depoliticised public life

In my forthcoming book Creative destruction I describe the way that economic policy has been depoliticised since the 1980s. The fatalist perspective associated with Margaret Thatcher’s TINA – ‘there is no alternative’ – applied as much as anywhere to the workings of the market economy. The acceptance of TINA indicated the demise of left-right political contestation for changing and improving society through differently organised economic systems.

Politicians of all stripes embraced this TINA outlook and reduced the scope of economic policy to managing the economy. The primary goal was ensuring stability. Much of this management function was assigned to technocrats, including souped-up regulators, expert-led commissions and central bankers. This outsourcing by politicians of their economic responsibilities to unaccountable bodies and institutions reinforced the conservationist, status quo orientation of economic policy that has proved so damaging to economic performance. Pro-stability measures have tended to stunt the functioning of creative destruction and helped entrench our zombie economy. Continue reading

Economists: culprits or scapegoats?

At the start of this year Andrew Haldane, the Bank of England’s chief economist, declared that the economics profession was ‘to some degree in crisis’. He highlighted its ‘Michael Fish’ moment before the 2008-9 financial crash when most economists were as off the mark as the infamous BBC weather forecaster in anticipating an impending hurricane in 1987. Haldane went on to admit – ‘a fair cop’ – that economic experts at his own Bank, as at the IMF, the OECD and the Treasury, had seen their gloomy predictions of the effects of a vote for Brexit confounded by what actually happened. The economy continuing to run along pretty much as it had before the referendum, even ticking up a little as 2016 went on.

The clarity of Haldane’s mea culpa about economists getting their predictions wrong wasn’t matched by his explanation for why. Continue reading