Editor’s Notes: Check back in with the forecasters in 2033
The Treasury’s Brexit scenarios, released this week, boiled down to a claim – made with pinpoint accuracy – that the Prime Minister’s deal will leave the UK economy 3.9 per cent smaller in 15 years, compared with staying in the EU.
In other news, PwC estimates that artificial intelligence will increase UK GDP by 10.3 per cent over the same period. So, as long we embrace algorithmic overlords while implementing May’s deal the economy will grow by 6.4 per cent. Clear? Meanwhile, the Bank of England’s stress-testing Brexit scenario (the one that got everyone desperately excited on Wednesday) was based on the assumption that the UK would take no corrective action whatsoever.
Given that the chancellor has already said the UK would move to make itself more competitive in the event of no deal, this seemed a rather daft omission. Paul Krugman and Andrew Sentance – two Remain-supporting economists – have poured scorn on the Bank’s model, and the Treasury’s workings aren’t coming off much better, either.
Tempting fate
When I stumble across errors in other newspapers I think, ‘there but for the grace of God.’ I’ve let more than a few mistakes slip through the editorial net in my time. We live and learn, and I wouldn’t dream of revelling in the mistakes of other newspapers. That said, a Google search for ‘equity outflows’ offers, as its first result, an FT headline reporting that UK-focused equity funds have seen $1 trillion in outflows since the Brexit vote. This is alarming.
On clicking the link it becomes clear the FT article has been corrected – and the actual outflow over that period is £20bn. It seems someone was a little overzealous with the calculator. Incidentally, while £20bn is nothing to sniff at the equity sell-off in Germany has been larger, in relative terms, over the same time frame. Brexit is an issue, but it’s far from the only one.
Better left un-red
Labour’s John McDonnell is almost a common sight in the Square Mile these days, cropping up at roundtables offering his reassuring ‘you can trust me’ pitch. In reality, the City remains scared stiff by the thought of a Corbyn government, and with good reason. As is often the case with Labour, they rightly identify areas of public concern (such as excessive executive pay) and then cook up some pretty unappetising policies.
On the high-pay debate, for example, they seem much more interested in curbing remuneration at the top than they do with increasing it at the bottom. This week the party endorsed a report written by a Sheffield University academic that called for customers of large companies to have the right to vote on the firms’ executive pay. The report also called for companies with over 250 employees to publish the names of people earning more than £150k. These dystopian ideas only move the debate further away from practical, effective solutions.
A near escape
To the Royal Opera House on Tuesday night for a sumptuous performance of Verdi’s Simon Boccanegra. The production was a delight from prologue to the final ovation, and for a time I felt pure pleasure at being immersed in such glorious art – away, briefly, from an unrelenting news agenda. I ought to seek such escapism more often. However, Boccanegra dwells on tension between the people and the elites as well as rebellious senators and duplicitous advisers – so Brexit drifted into my mind more than once. There’s no escaping it.
Classically trained
In my the first seminar of an undergraduate business module at university, the tutor asked us to rank FTSE 100 chiefs on “a fat cat scale.” This set the tone for the rest of the year. Academia is achingly left-wing, but a ray of hope emerges at the University of Buckingham’s new £8m Vinson Building that opened this week. Lord Vinson is life president of the Institute of Economic Affairs, and this new, modern centre for the academic study of classical liberalism is a welcome project.