Should I stay or should I go? ‘Brexit’ is possible exit of the UK from the EU pending a public vote in June. Economic arguments abound, but are any of them strong enough to justify a stay or leave position. Like buying a BMW, maybe the specs are there simply to justify what your emotions will make you do anyway.
Neil Woodford, former Invesco head of UK equities who set up his own investment house in 2014, says in a video on his website that strongly-held arguments on both sides are “bogus”.
“I think it’s really hard to see any significant credibility in an argument to stay or to leave constructed around economics.”
The report summarises:
Although the impact of Brexit on the British economy is uncertain, we doubt that Britain’s long-term economic outlook hinges on it. Things have changed a lot since 1973, when joining the European Economic Community was a big deal for the United Kingdom. There are arguably much more important issues now, such as whether productivity will recover. The shortfall in British productivity relative to its pre-crisis trend is still over 10%, so regaining that lost ground would ofset even the most negative of estimates of Brexit on the economy.
Based on assessing the evidence, we conclude that:
- The more extreme claims made about the costs and benefts of Brexit for the British economy are wide of the mark and lacking in evidential bases
- It is plausible that Brexit could have a modest negative impact on growth and job creation. But it is slightly more plausible that the net impacts will be modestly positive. This is a strong conclusion when compared with some studies
- There are potential net benefts in the areas of a more tailored immigration policy, the freedom to make trade deals, moderately lower levels of regulation and savings to the public purse. In each of these areas, we do not believe that the benefts of Brexit would be huge, but they are likely to be positive
- Meanwhile, costs in terms of fnancial services, foreign direct investment and impacts on London property markets are more likely to be short-term and there are longer-term opportunities from Brexit even in these areas
We continue to think that the United Kingdom’s economic prospects are good whether inside or outside the European Union. Britain has pulled ahead of the European Union in recent years, and we expect that gap to widen over the next few years regardless of whether Brexit occurs.