The Brexit debate (please grant the word “debate” its widest latitude) has been heavily criticised on both sides for inaccuracies, scares and out-and-out lies. On the Leave side, the most egregious and obvious lie was that leaving the EU would mean that £350 million per week could be given to the NHS instead of paying it to the EU; closely followed by the idea that signing up for a free-trade deal with the EU would be the easiest deal in human history. On the Remain side, some of the economic projections of leaving were over-stated to the effect that they would be immediate, missing the point that Article 50 notice under the Treaty of Lisbon, involved a two-year notice period. Leave did a good job of framing the Remain position as “Project Fear”, but as time marches on towards the Brexit date of 29/3/19, many of these “fears” are increasingly seen to be factual.
The International Monetary Fund (IMF) has trimmed its projection for UK growth from 1.7% to 1.6% for the current year, citing “Brexit uncertainties”. It is also expecting growth to fall in 2018 to 1.5%. The IMF is concerned that uncertainty over Brexit itself and the desired 2-year transitional period is causing businesses to delay their UK investment plans. Prior to the 2016 referendum shock, the IMF projection for 2017 growth stood at 2.2%.
Christine Lagarde, the IMF head, noted that: “the UK is losing out as a result of higher inflation, pressure on wages and incomes and delayed investment. If you look at investment alone, with 2.1% of GDP in investment, with the global economy as it is, and the space the UK economy has in that global economy, it should be rolling at 6%." The IMF is blaming the weakness of the Pound, post referendum, as the pump for UK inflation which currently stands at 3.1%.
In comments made to the BBC’s Kamal Ahmed, Ms Lagarde responded to criticism that the IMF forecasts had been too gloomy about a Brexit vote, she stated: "The numbers that we are seeing the economy deliver today are actually proving the point we made a year and a half ago when people said, you are too gloomy. We were not too gloomy, we were pretty much on the mark, I mean within 0.1% or so - our forecast actually turned out to be the reality of the economy. Sterling has depreciated, inflation has gone up, wages have been squeezed as a result, and investments have been slowed down and are certainly lower than where we would expect them to be."
Project Fear, right…