August 22, 2016
Gold for Brexit
We were wondering whether we would have the chance to mention the Olympics in our newsbriefing without going off topic. The opportunity has miraculously presented itself as the UK government now wants to capitalise on the performance of the UK team, which came second overall in Rio, and harness the same spirit in the forthcoming Brexit preparations, The Times reports. The article is complete and utter nonsense, of course. But the Olympics are important in one respect. For now, at least, they have strengthened the illusion that the UK could succeed on its own, and that is a message the British government will peddle in the tough negotiations that lie ahead. In particular, it may tilt the British approach towards Brexit towards a further distance from the EU, and it takes the wind of the sail of embittered Remainers, who had hoped that the country will soon collectively regret the Brexit vote, and clamour for another referendum.
We very much agree with Charles Grant's comments, as reported in the Guardian, that government ministers are hopelessly unprepared for what lies ahead - even now two months after the vote (something that, we suppose, distinguishes them from the gold medal winners in Rio). Brexit will happen of course, Grant said, but it is going to be extremely difficult, and will take a long time. The Times also mentions that Theresa May will use her speech at the Conservative Party conference in October to reflect on the successes of the Olympics as a backdrop to her new industrial strategy, which is based on picking winners in certain high-tech industries based around university towns, such as Bristol.
Of the many Brexit comments, one we noted was by Simon Wren-Lewis, an Oxford economist who used to make a very strong case for Remain during the campaign, and who is now bitterly complaining about reactions from journalists who are criticising him and other colleagues for overstating the Remain case. We believe that some of the criticisms of the economics profession are justified - up to a point, since we will not know the long-term impact which may well be negative - a possibility we, too, would acknowledge. However, we believe that economists, as a profession, will need a thicker skin especially if they engage in public debates as they did during the Brexit campaign. When they do so, they should not be surprised that the outside world examines their record, and tests their forecasts against reality. The outside world, too, has noted that the standard macroeconomic models that have been in use for the last 15-20 years have not only famously failed to predict the financial crisis, they misjudged much of what has been going on since.