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Why should the left embrace Brexit?



Nothing better reflects the confused thinking of the European mainstream left than its attitude towards Brexit. Each week, a new chapter in Brexit's horror story seems to be emerging: The withdrawal from the EU will be an economic disaster for the United Kingdom; Tens of thousands of jobs will be lost; human rights will be eviscerated; The principles of fair trial, freedom of speech and decent labor standards are all compromised. In short, Brexit will turn Britain into a dystopia, a failed state – or worse, an international pariah – cut off from the civilized world. With that in mind, it's easy to see why the leader of the Labor Party, Jeremy Corbyn, is often criticized for not lobbying for a Remain agenda.

The anti-Brexit hysteria of the left, however, is based on a mixture of bad economics and misunderstanding of the European Union and a lack of political imagination. Not only is there no reason to believe that Brexit would be an economic apocalypse; more importantly, the task of the EU offers the British left ̵

1; and the European left in general – a unique opportunity to show that a radical break with neo-liberalism and the institutions that support it is possible [19659003] Understanding why the anti-Brexit stance of most European progressives is unfounded and actually harmful, we should first consider the most widely used Brexit myth of all: the idea that it will lead to an economic apocalypse. For many critics, this is an open and closed case, simply by referring to a much publicized, leaked report drawn up by the UK Government's own Departement of the European Union (DExEU). The document concludes that all possible forms of Brexit – from remaining in the single market to a free trade agreement or no agreement – would have a significant negative impact on UK GDP. Estimates of a 2 percent reduction in GDP and 700,000 fewer jobs over the next fifteen years, GDP down 8 percent and jobs down to 2.8 million.

This argument can be found in a recent article by anti-Brexit commentator Will Denayer, citing the fact that the report was produced by Britain's "pro-Brexit government" as evidence of its reliability. He admits, however, that these predictions suffer from a neoliberal bias embedded in the forecasting models themselves . The mathematical models used by the UK government are very complex and abstract, and their results are sensitive to the numerical calibration of the relationships in the models and assumptions made, for example, about the effects of technology. The models are notoriously unreliable and easy to manipulate to achieve the desired result. The British government has refused to publish the technical aspects of their modeling, suggesting that they do not want independent analysts to test their black box assumptions.

The neoliberal prejudices in these models include the claim that markets are self-regulatory capable of delivering optimal results as long as they are not hampered by government intervention; this "free trade" is clearly positive; that governments are financially constrained; these supply side factors are much more important than the demand side; and that individuals base their decision on, among other things, "rational expectations" about economic variables. Many of the key assumptions used to construct these exercises are unrelated to reality. Put simply, the prediction models – similar to the mainstream macroeconomics in general – build on a sequence of interconnected myths. Paul Romer, who graduated in economics at the University of Chicago, the temple of neoliberal economics, in the 1980s, has recently used a devastating attack on his own profession by mainstream economists in his essay "The Trouble With Macroeconomics." – what he calls "post-real" – as the endpoint of an intellectual regression of three decades.

It is therefore not surprising that these models could not predict the financial crisis and the Great Recession, and today they are constantly failing to make reliable predictions about anything. Brexit is an obvious example. In the months leading up to the referendum, the world was overrun by warnings – from the IMF, the OECD and other bastions of contemporary economics, claiming that referendum turnout would have immediate apocalyptic consequences for the UK, leading to financial meltdown problems and plunged the country into a deep recession. The most embarrassing prediction about "the immediate economic impact of a vote on Britain's exit from the EU" was published by the Tory government. The objective of the "study" in question, published by the UK Ministry of Finance in May 2016, was to quantify the "impact … in the immediate phase of two years following a vote vote".

Within Two Years of Choosing The Ministry of Finance predicted that GDP would be 3.6 to 6 percent lower and the number of unemployed 820,000. The predictions in the "Study" of May 2016 appeared bleak and clearly aimed at having the biggest impact on the vote, which would take place a month later. A few weeks before the referendum, then-Chancellor George Osborne quoted the report as warning that "voting would be an immediate and profound shock to our economy" and that "the shock would plunge our economy into recession and lead to an increase in an unemployment of about 500,000. "

Nevertheless, the majority of voters opted for Brexit. This proves once again that economists are wrong, because none of the scenarios predicted in the run-up to the referendum has occurred. Larry Elliott, Guardian business editor, wrote: "Brexit Armageddon was a frightening vision – but it simply did not happen." After almost two years since the referendum, economic data from Britain mocks these doomed warnings – and especially the government report mentioned. Office of National Statistics (ONS) data show that British GDP was already 3.2 percent higher by the end of 2017 than at the time of the Brexit vote – far from the deep recession we were told

Source: Office of National Statistics and Calculations of Authors

The unemployment rate fell from 4.9 percent to 4.3 percent between June 2016 and January 2018, while the unemployment rate fell by 187,000 – a forty-three annual low. The economically inactive – those who are neither working nor looking for work – have fallen the most in nearly five and a half years. So much for the countless workers who were to become unemployed through the ballot box.

Particularly embarrassing for the professional pessimists are the data on British industry in the last two years. Despite the uncertainty surrounding the negotiations with the EU, "manufacturing has grown the most since the late 1990s," said the Economist and UK Manufacturers Association EDF. This is mainly due to growing demand for UK exports, which benefit from the benefits of the lower pound and improved world trade conditions. According to a report by Heathrow Airport and the Center for Business and Enterprise Research (CEBR), British exports have their strongest position since 2000. As the Economist recently said, "Britain's suffering doers enjoy a boom in one-off Generation, "as the shifts triggered by the Brexit result in a much-needed" realignment "from boom and bust financial services to manufacturing. This also promotes the growth of investment. Total investment spending in the UK – which includes both public and private investment – was the highest of all G7 countries in 2017: 4 percent year-on-year.

Predicting that a holiday victory would cause the British economy to be smashed a "run on the pound" has also proved unfounded: yes, the pound sterling has lost ground to other major currencies since the referendum, but that not only did not destroy the British economy – quite the contrary, as we have seen – but since the beginning of 2017 its value has been rising again.


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