This group of economists is scandalised by the IFS’ “£40bn fiscal black hole” Brexit report
The Institute of Fiscal Studies (IFS) is generally regarded as pretty impartial, so the fact it issued a strong warning on the potential impact of Brexit – warning it could leave the Treasury with a £40bn fiscal black hole – has surprised some.
Not least the esteemed members of Economists for Brexit, which this morning slammed the report.
Gerard Lyons, former economic adviser to Boris Johnson and the organisation's co-chair, pointed out there was a similar weight of economic opinion when the pound left Europe's exchange rate mechanism.
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"Then the consensus was that if the pound left the ERM, inflation would rise, interest rates increase and the UK economy would shrink. The opposite happened. The UK economy grew strongly, against the consensus."
"The IFS's forecasts follow directly from the economic growth numbers. If one has a more upbeat view of the economic outlook with Brexit, as the Economists for Brexit group does, then naturally the budget numbers improve considerably. The analysis from the IFS highlights how vulnerable UK finances are to any economic setback, but we could easily suffer such a setback remaining in the EU.
Patrick Minford, a former adviser to the Treasury and the organisation's other co-chair, added that the IFS had acknowledged the a unilateral free trade approach would be the best option if voters did opt to leave the EU – but that going down such a route may be "politically difficult".
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“This is entirely irrelevant for what is an purely economic argument," he said.
"Such matters are for the government of the day to decide, elected by voters in the UK.
"The problem remains that the Treasury’s assumptions about a post Brexit world are economically very damaging; it is extraordinary and unforgivable that not only the Treasury but other economic bodies have avoided making the assumption of unilateral free trade which is the best one for the British people.”