by Ewen Stewart, Brexit Central, 4th November 2017
One does not need a long memory to recall the persistent and dire warnings that if the UK voted to leave the EU, in June 2016, there would be an immediate sharp recession and subsequent collapse in employment.
HM Treasury official guidance to voters, in a letter sent to each and every household, was that on a Leave vote, “Britain’s economy could be tipped into a year-long recession. Further, at least 500,000 jobs could be lost and GDP could be around 3.6% lower following a vote to leave the EU than it would be if we remained in the EU.”
To be fair to George Osborne, he was not alone with clear and very gloomy forecasts, albeit amongst official forecasting bodies there was a remarkable groupthink. However, it is worth reminding ourselves exactly what has happened over the last 500 days.
Firstly, the economy did not decline by 3.6% as promised. It has grown in each and every quarter by an average of 0.4% per quarter since the referendum with an almost boring consistently. Today GDP is 2.5% higher in real terms than it was the day before the referendum. In other words that is 6.1% better than the Treasury forecast, equivalent to £135bn of extra annual production over their estimate, or just over £2000 for every man, woman and child.
Next, the Treasury forecast the loss of 500,000 jobs with a year of the vote. Actually over the last 500 days since the referendum, 317,000 new jobs have been created, or 634 new jobs each and every day since we voted to Leave.
Indeed, never have more people worked in the UK than today, 32.1 million, and not since 1974 has unemployment been so low as a percentage of the total workforce. The Treasury forecast was simply wrong. Britain has been the undoubted European bright spot for employment growth with a rate of unemployment well under half the EU average.
Moreover, the increase in employment is across the board. 88,000 more jobs in healthcare, 16,000 more in agriculture, 61,000 more in construction, 96,000 more in IT, 114,000 more in hospitality, 38,000 in automotive, 79,000 more in transport and despite the dire warnings relating to the financial sector stability with no nett job losses. Indeed it is the private sector, not the public sector that is creating the employment, which is quite at odds with the doom and gloom penetrating the airwaves every night on the 10 o’clock news.
The naysayers say, ‘well, they are rubbish zero hour contract jobs.’ This simply is not true. Perhaps the best measure of underlying income growth comes from HMRC. Income tax paid for fiscal year 2016/17 was 5.4% higher than the previous year, a take well ahead of inflation. Given personal allowances rose, particularly for the less well paid, this is a very strong indication that earnings are growing strongly.
Real disposable income, which is a much broader measure of prosperity than the often quoted and rather archaic ‘average weekly earnings survey’, as the former includes total income including that from the self-employed, while the latter does not, remains firmly in positive territory in real terms. Moreover, even if one accepts the narrower definition of wage growth, I don’t recall the media mentioning that real wages actually fell rapidly between 2010-14 before an EU referendum was even a possibility?
But they remain at it. Just last week the Bank of England cries “prepare for 75,000 job losses” in financial services following our departure from the EU. What are they doing? Do they not think that City employers might just have clocked that the UK is leaving the EU and that no deal is very possible? Of course they have, and simply, if City employers were that worried they would not be hiring now. They are.
The UK central bank is being wholly irresponsible. Their job is not to publicly talk the UK down, even if they happened to believe these absurd predictions which are in conflict with actual financial services employment trends and numerous other surveys including a separate poll of 100 financial services firms by Reuters, who put possible job losses at less than 10,000, or around 0.6% of all financial services jobs. What possible interest does the UK Central Bank have in putting about the worst possible (improbable) outcome?
We live in parallel worlds. Those who cannot accept the result, who have bought into the dire warnings, save they are now tomorrow, not today as previously promised. Of course there are problems, of course not everything is perfect, but it is the Remain camp that have the questions to answer, not Leave. Their immediate and dire predictions of job losses and severe economic mishap has simply not been true. Britain is now enjoying its eighth consistent year of economic growth and record employment. Now that is something to toast 500 days after the vote.