Mark Spencer says government wants to reduce ‘red tape’ after UK firms say Brexit deal has not boosted business
As reported here yesterday, the Centre for European Reform has published an analysis claiming that Britain’s GDP is 5.5% lower than it would have been without Brexit.
Jacob Rees-Mogg, the former business secretary and leading Brexit enthusiast, has published an article for the Daily Express criticising the methodology used by the CER. The CER has identified a clutch of countries whose economic performance closely matched the UK’s in the decade or more before Brexit, and it has compared the performance of this ‘doppelgänger’ UK (a statistical fiction, based on the performance data for the comparator countries) since 2016 with the performance of the real UK. Rees-Mogg claims this approach is “absurd”. He says:
[The model] maintains that by membership of the EU the UK economy will do better but then goes on to argue that this country should not be compared to the economies of Germany, France and Italy but to faster growing nations. These two arguments contradict each other.
If as the CER says the major continental economies are inherently slower growth than the UK surely we would want to be less associated with them and freer to operate globally. The fact that, since we voted to leave, we have performed better than all the major European economies save France, shows our success.
Just because countries are of a similar size in a similar region, they do not necessarily have a similar economic model or growth rates. Better doppelgänger countries may be found elsewhere by the algorithm. Indeed, the UK’s growth rate between the introduction of the euro in 1999 and 2016 was markedly different to France, Germany and Italy’s. It was far closer to that of the US.
The 0.3% contraction in UK GDP in Q3 reported this morning is worse than Japan’s 0.2% fall in GDP, while Canada and the US both expanded pacily, by around 0.7%.
France (+0.2%), Germany (+0.4%) and Italy (+0.5%) all grew in July-September too.