Opinion

Osborne’s Dodgy Dossier

18th April 2016

George Osborne today revealed a Treasury report, a report some have called his ‘dodgy dossier’ after Blair’s false intelligence on Iraq, which claimed that Britain’s economy would be ‘permanently poorer’ in 2030 if we left the EU. George went further, claiming that this would equate to a loss of £4300 per year for each and every household.

These conclusions contained within the report, among others, are based on unfounded assumptions and disingenuous statistics about post-Brexit economic paths the UK might follow.

For example, George’s Europhilic report was suggesting that if we remain in the EU and continue on our current growth trajectories and see no alteration in rates of immigration and investors continue to choose Britain and the EU does not impose many more regulations and restrictions than it already does, we might see a growth rate of 37% between now and 2030.

The opposite result he puts forward in the event that we vote to remain in the Union, in the worst case scenario, is that we see a growth rate of 29.5%. What the report really claims is that if we vote to leave, we might be making ourselves slightly less ‘better off’ than if a) we vote to remain and b) all those things above are true. But they aren’t.

Left absent from the report, is how inaccurate Treasury forecasting can be. Economics is not a mathematical science. We cannot be sure of what is going to happen before close of play today, let alone in fourteen years. Let us bear in mind that Osborne is the Chancellor who came to power in 2010 promising to clear the deficit by 2015; yet six years on we have a deficit of almost £80bn per year still. Let us also bear in mind that Osborne in January failed to accurately predict growth rates for this quarter of 2016, let alone fourteen years into the future.

Osborne also fails to discuss the strength of public services. Everyone knows that the country is not in a good way; the public debt is nearing £2 trillion, schools are wildly oversubscribed, the NHS dangerously overstretched, the pension pots raided for all their worth and house prices rising faster year-on-year than they have any time in living memory. The suggestion that everything will be alright if we remain, because GDP might be 6% stronger and the Treasury might have £36bn extra in the coughers (I stress ‘might’), is ludicrous.

Osborne demonstrates a complete misunderstanding of the immigration situation too. The report predicts a net migration falling from last year’s 329,000 to just 185,000 from 2021 onwards even if we stay. There are two big problems with this; one is that it is almost certainly untrue. If we cannot reduce our immigration figure to below 300,000 now, what makes Osborne think we could nearly half it in 2021? The second issue is this: it is still some 86,000 people above the Conservative Party’s 2010 election promise to bring the country’s net migration to “the tens of thousands” (i.e. a maximum of 99,999). Clearly, Osborne cannot be trusted on his immigration guidance either.

What Osborne did include in the report, however, was a threat – he claimed that to pay for the £36bn the Treasure might lose (ahem, he means “might not gain”) if his calculations are actually correct, he would have to increase income tax by 8p in the pound to cover the costs. Not only is he using disingenuous mathematics conflated with bad politics, he’s now issuing threats to the British people if they don’t vote his way.

Now, aside from the technical problems and the serious threat contained throughout the report, this dossier ignores completely the potential economic benefits of Brexit. It does not consider the £25m the Treasury would save every day. It does not consider the money the NHS and education system would (would, not might) save from the slowed flow of immigration. It does not consider the £33bn each year British businesses could save as a result of cutting EU red tape. It does not consider the reduction in trade barriers between the UK and other countries – it does not explore the potential benefits of new free trade agreements with the commonwealth, our former colonies and anyone else we might see fit to do deals with.

The report is also based on the misguided assumption that we will move to one of three deal ‘models’ of EU-UK relations: the Canada model, the World Trade Organisation model or the Norway model. If Canada, Norway, Iceland and Switzerland all have different models, why on earth would the UK have to follow one of these models? Surely the fifth largest economy in the world can have its own model?

The final mistake the report makes is in assuming that the status quo is what we will get if we stay. But the European economy is shrinking as a proportion of the global economy and yet asks more money of its members. The fact is that by 2030, Ukraine and Turkey might both have joined the EU. Georgia, Moldova, Bosnia, Kosovo, Albania, Macedonia, Montenegro and Serbia also are potential candidates. “Refugee” quotas are seriously on the agenda too, meaning Merkel’s “welcome” to migrants from the East will apply to Britain. The Union is constantly pushing for more and more Europe; more and more ‘ever closer union’. The Eurozone remains in crisis; threatening to drag France, Spain, Italy and others down with it; probably us too by association. The red tape of the European Union expands and grows with every passing directive, every passing regulation. The very suggestion that the EU will look the same in 2030 as it does today is wholly absurd.

In short: this report is based on false mathematics, false assumptions and a threat of higher taxes. It is absolutely not to be trusted. While Osborne wants you to trust this biased report from the Treasury, he would not want you to trust THIS report from the Institute of Economic Affairs which suggests that the EU costs the economy 13% of GDP each year, rather than providing us a 6% stimulus like the Treasury suggests. Which would you rather trust, the Chancellor’s political and unreliable tool, or the IEA’s independent advice?

Outside the EU, European businessmen, farmers and tradespeople will want to sell Britain their produce unhindered; nobody has any interest in erecting trade barriers like Osborne assumes. Even if they did, British produce isn’t about to be blocked from the European market. Outside the EU, the country is back under the control of you and I; the sovereign people.

Outside the EU, the economy could grow in a new direction, putting more money in the pockets of average people, creating jobs and cutting away the red tape.

 

 

To see more economic arguments in favour of Brexit, see Janice’s article in the Huffintgon Post: http://www.janiceatkinson.co.uk/2016/04/janice-responds-to-basic-questions-raised-by-eu-commissioner-lord-hill-regarding-brexit/