In the referendum run-up, we were inundated with warnings and messages of doom and gloom about the untold damage Brexit would unleash – and unleash immediately. It took a pub boss – Tim Martin, the founder of JD Wetherspoon’s – to add a bit of perspective. Why, he argued, would consumer sentiment plunge of a majority voted Brexit and got what they wanted? Why, if we wouldn’t actually leave the EU for two years, would the economy fall of a cliff? At the time, he was mocked for knowing nothing more than how to pull pints. But now, with the prophecies of economic woe having failed to materialise, it seems he was more on the money – a point he has made. In a long, detailed letter, he had this to say:
‘The overwhelming majority of FTSE 100 companies, the employers’ organisation CBI, the IMF, the OECD, the Treasury, the leaders of all the main political parties and almost all representatives of British universities forecast trouble, often in lurid terms, for the economy in the event of the leave vote. What I call ‘scare story one’ was that the act of voting leave would cause an immediate and profound downturn in the economy, and that’s been proved to be entirely false.’
But whilst Tim Martin’s list is lengthy, it isn’t wholly conclusive. The Spectator has been compiling a compilation of those – from companies like Nissan, Credit Suisse and Siemens, to politicians such as Barack Obama and experts like Rob Wainwright, the British head of Europol – who have been forced to row back on their prophecies. You can read the full round-up here.
As Ross Clark points out in his cover piece this week, steadily, economists who rather lost their heads during the EU referendum campaign, have been pulling themselves together. Ross quotes Ian Stewart, Deloitte’s chief economist, who pointed out what the more excitable economists should have realised, that uncertainty is not the same thing as calamity. ‘Brexit is a political turning point whose long-term implications are unknown,’ he said. ‘In that respect it has something in common with Labour’s election landslide in 1945 or Mrs Thatcher’s in 1979. But Brexit is not a global economic shock.’
The moral, of course, is not that pub landlords always know better than economists. But sometimes, the economics profession can succumb to groupthink – or group panic.
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