Boris Johnson’s Brexit intervention has put the focus back on statistics, says ANGELA JAMESON. And the actual numbers do not look good
Boris Johnson has done more to stimulate interest in how statistics are used and abused in the last few days than the UK Statistics Authority has managed in its 10 year lifetime.
BoJo’s deliberate revival of that £350m claim has led to a ticking off from not only Sir David Norgrove, chairman of the UK Statistics Authority, but also from the Institute for Fiscal Studies.
The IFS pointed out that Johnson’s use of the £350m a week figure was misleading on a more fundamental basis, than just a deliberate ambiguity over our gross and net contribution to the EU.’The bigger picture is that the forecast health of public finances was downgraded by £15 billion per year – or almost £300 million per week – as a direct result of the Brexit vote. Not only will we not regain control of £350 million weekly as a result of Brexit, we are likely to make a net fiscal loss from it,’ the IFS wrote in a letter to The Times.
It was the Brexit blow to the health of the economy that the Bank of England’s governor was discussing in Washington on Monday. Hinting that interest rates would have to rise soon, perhaps as early as November, Carney said that Britain’s economy would not be able to grow as fast as it otherwise might and that inflation would climb higher as we extract ourselves from Europe.
Carney predicts that during the period of transition – as businesses grapple with changing supply chains and skills shortages – the UK will under-perform in comparison with other global economies, for only the third time in three decades. Carney thinks that slower expansion would persist until at least mid-2018.
But to curb inflation it is necessary, according to most of the Bank’s rate-setters, for some modest ‘monetary tightening’. Mortgage rates and consumer borrowing rates will rise automatically as the extra monetary stimulus that was added to immediately after the referendum is removed.
The bank could also reverse its interest rate cut last August, by pushing its lending rate back up from 0.25% to 0.5%. Investors are now expecting two base rate hikes before the end of 2018.
When the going gets tough, the tough get writing and business leaders’ fears for the next 12 months were laid out in a letter organised by the CBI. Over 100 business executives from companies including Centrica, Harrods and Johnson & Johnson called on Theresa May to secure a three-year transitional period and warned that failure to do so would jeopardise the country’s prosperity.
The CBI is alarmed by the snail’s pace of progress in three rounds of Brexit talks and thinks that achieving a deal by March 2019 now looks unlikely. Its members are worried and 40% of them are now reducing or delaying investment.
Aston Martin was the latest car manufacturer this week to speak out on the need for some clarity, calling for a fuller picture within six months – so that it can avoid damaging trade tariffs. While BMW’s Harald Krüger has employed another euphemism, saying that the carmaker will be ‘flexible’ on whether it continues to make car models in the UK, after Brexit.
The new electric mini is supposed to be built in Oxford, but the motors, gearbox and battery will be imported from Germany.
If BMW suddenly has to pay import tariffs, then the German carmaker might decide that its Mini factory in the Netherlands is a better place for the electric car to be assembled. Meanwhile, Theresa May flew to Canada to push for a new UK-Canada trade deal.
Prime Minister Trudeau was optimistic in his anticipation of a ‘seamless transition’ in the trading relationship between the UK and Canada. However, this may be harder to achieve than it is to say. There has been nothing seamless about the UK’s progress towards Brexit so far.
The UK is Canada’s biggest trading partner within the EU, so there is a big incentive for both sides to get this right.