EU & Brexit Bunker

[briantrumpet]

On the plus side, economists of the future will have some decent data to show what happens when a major trading nation leaves a flawed-but-successful trading bloc on their doorstep.

 

[PurplePenguin]

You'll have to argue with the paper rather than me - their credentials are more impressive than mine, despite my extensive participation in the CS thread.

But this graph might help to explain - it looks like we haven't even kept up with the average (if I'm reading it correctly), let alone the better ones.

View attachment 10976

Usually these sorts of things just blend a bit of EU growth with some US growth and say that's what the UK would have done i.e. massively outperform all European peers.

I actually agree with First Aspect on this one.

 

[PurplePenguin]

On the plus side, economists of the future will have some decent data to show what happens when a major trading nation leaves a flawed-but-successful trading bloc on their doorstep.

The problem is that they don't because of Covid and war in Ukraine.

 

[briantrumpet]

The problem is that they don't because of Covid and war in Ukraine.

Did the rest of the EU and world avoid those two shocks?

 

[PurplePenguin]

What does that matter if we were still economically disadvantaged by leaving?

If someone wants to make the argument that the UK would have massively outperformed its peers, then I'm interested to know why.

 

[PurplePenguin]

Did the rest of the EU and world avoid those two shocks?

No, but they had differing impacts on different countries.

 

[briantrumpet]

Usually these sorts of things just blend a bit of EU growth with some US growth and say that's what the UK would have done i.e. massively outperform all European peers.

I actually agree with First Aspect on this one.

Well, when a paper comes out written by renowned economists that critiques/undermines the conclusions of this one, I'll be interested to read it and its rationale.

 

[First Aspect]

Is it still too early to tell, and to say "We tried to tell you"?

Actually, I see it says "they underestimated the impact". Sorry.

View attachment 10975

https://www.nber.org/papers/w34459

Out of interest, is this peer reviewed, or does "working paper" infer it is a work in progress?

 

[briantrumpet]

No, but they had differing impacts on different countries.

And could that have been because (for instance) they were still members of large trading blocs? I'll accept that the war and covid could not specifically have been foreseen as the hard Brexit we ended up with was being formulated, but equally withdrawing from the EU was inherently risky. Sure, it was bad luck that they both came along the moment the UK left, but I can't see anything that left the UK inherently more exposed to covid or the war - for instance, Germany's hyper-reliance on Russian gas was a severe risk.

 

[briantrumpet]

Out of interest, is this peer reviewed, or does "working paper" infer it is a work in progress?

The full paper is available from this link: https://www.nber.org/system/files/working_papers/w34459/w34459.pdf

NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

 

[First Aspect]

And could that have been because (for instance) they were still members of large trading blocs? I'll accept that the war and covid could not specifically have been foreseen as the hard Brexit we ended up with was being formulated, but equally withdrawing from the EU was inherently risky. Sure, it was bad luck that they both came along the moment the UK left, but I can't see anything that left the UK inherently more exposed to covid or the war - for instance, Germany's hyper-reliance on Russian gas was a severe risk.

There's a difference between the general idea we would have been better off, and postulating the number in that paper. Which do not pass the sniff test.

The only hypothesis that would make any sense is that the EU growth has been damaged significantly by Brexit as well. But you'd expect that to be proportionally a lot smaller.

 

[briantrumpet]

If someone wants to make the argument that the UK would have massively outperformed its peers, then I'm interested to know why.

Why not just "outperformed its peers", rather than underperformed? Your "massively" doesn't appear to be reflected in the paper.

 

[briantrumpet]

There's a difference between the general idea we would have been better off, and postulating the number in that paper. Which do not pass the sniff test.

The only hypothesis that would make any sense is that the EU growth has been damaged significantly by Brexit as well. But you'd expect that to be proportionally a lot smaller.

Well, if your sniff test is justified, I expect the paper and its authors to be speedily ridiculed for their poor assumptions/methods, as that's what academics do to each other.

 

[PurplePenguin]

And could that have been because (for instance) they were still members of large trading blocs? I'll accept that the war and covid could not specifically have been foreseen as the hard Brexit we ended up with was being formulated, but equally withdrawing from the EU was inherently risky. Sure, it was bad luck that they both came along the moment the UK left, but I can't see anything that left the UK inherently more exposed to covid or the war - for instance, Germany's hyper-reliance on Russian gas was a severe risk.

I skimmed the paper quickly.

They caveat their macro analysis due to the impacts of covid. As a result, they attempt to use some micro analysis which they typically do not do - this shows a smaller impact.

They use the group of countries I expected them to (EEA, US, Canada and Japan) then find under performance based on how much weighting is given to the US. I didn't see any discussion on whether the extraordinary levels of US growth were likely to have been replicated in the UK. Some of the US boom has been due to high gas prices and technology companies.

 

[dutchguylivingintheuk]

Is this the missing 4% of growth that would have propelled the UK to vastly outperform all its peers?

Numbers often lie by not telling the full story. Trade deals under the EU before Brexit where very slow, they accelerated it, and also normal poeple/poverty rates have gone up across the EU.(just as in the UK) so somewhere in the % someone has been doing the dirty with numbers... Maybe it has something to do with the EU's increasing debt pile?

It's misinformation. Check everything. Trust no one.

All true however you leave out the part that shows the EU significantly changed after Brexit / under Von der Leyen, transparancy took a nosedive, debit increased (much more then the UK's) and yes they started doing trade deals again, an thing almost dormant under the UK still in the EU situation.