If you’re tired of the inherent bias in the UK’s mainstream media, read the NAO’s report into HM Treasury’s economic analysis in the lead-up to the referendum on European Union membership. This is important because the Brexit referendum was secured on basis of promoting fear of immigration, rampant xenophobia, and false news, rather than independent evidence and risk analysis.
Obviously, the terms of reference and political interpretation of the HMT results will demonstrate an element of bias. But the Treasury’s basic methodology was sound, its assumptions reasonable and clearly defined – in short, a professional piece of work. The NAO report highlights the HMT economic analysis compared to other independent studies. It’s perfectly reasonable for the projected results to vary based upon assumptions and modelling methodology.
What is important is the generalized conclusion, rather than the precise metric.
The world’s leading economists, including Nobel Prize Winning, Paul Krugman, have argued that the medium to long-term cataclysmic outlook following Brexit is water-tight. Depending upon the terms of the Brexit, leaving the EU will damage the UK economically for years into the future. Finance theory allows us to capitalize the impact of a future cashflow at the prevailing cost of capital and provide a one-time net present value, or simply a one-time cost of the decision. Last year, I did this calculation and it was eye-watering – it’s a shame that it was not highlighted by the UK’s outrageously biased media.
Secondly, there is the short-term economic impact following the Brexit decision. Here’s there is more room for doubt as a wider range of assumptions comes into play.
But what is clear is that the medium to long-term impact of Brexit will be tragic, disasterous, calamitous, dire and ruinous, penalizing future generations.
For deeper coverage, I recommend the following earlier blogs:
- Opinion – The Macroeconomics of Brexit: Motivated Reasoning? – Paul Krugman – The New York Times
- Exploring implications of Krugman’s eyewatering cost of Brexit
- Opinion – Why Britain cannot afford to be conned by Cameron’s EU ‘renegotiation’ deal – Liam Fox – Telegraph
So what should be done to redress the catastrophic damage done by false news from deeply biased politicians and media, promoting self-interest ahead of national well-being?