Brexit minister says Whitehall economic forecasts always wrong

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One of Theresa May’s key Brexit ministers has claimed that civil servants have never produced a correct economic forecast, and said he looks forward to continuing to prove the “horror story predictions” of economists wrong.

Steve Baker made the comments to MPs after being summoned to explain a leaked analysis, drawn up by government officials, which suggests Britain would be worse off after Brexit under a wide range of potential scenarios.

Responding to an urgent question from the shadow Brexit secretary, Keir Starmer, who demanded the assessment be published, the MP said ministers had only just seen the research and insisted that “significant further work” was required.

In fact, Baker questioned the worth of such research, slamming the use of Treasury forecasts during the referendum as “Project Fear” and saying the public deserved a House of Commons that displayed a “healthy scepticism about economic forecasting”.

Asked by the Tory MP and leave campaigner William Wragg if he could name a single civil service forecast “leaked or otherwise” that had been proved accurate, the minister responded: “No, I’m not able to name an accurate forecast, and I think they are always wrong and wrong for good reasons. My longstanding views on the flaws in the epistemology of the social sciences and consequences for econometrics are long set out.”

Baker also responded to another Brexiter colleague, Peter Bone, who said people had still voted to leave the EU despite dire warnings.

“I look forward to the day when we continue to prove economists wrong when they make horror story predictions,” he said.

The minister argued that the most recent leaked papers, obtained by Buzzfeed, were a preliminary attempt by government to improve on the flawed analysis produced during the referendum, to test ideas, and design a viable framework for future predictions.

“At this early stage it only considers off-the-shelf trade arrangements. We have been clear that is not what we seeking in the negotiations,” he said, stressing that the officials had not looked into the government’s desired outcome of the “most ambitious relationship possible”.

“Therefore the scenarios in this analysis continue to suffer from the flaws we’ve seen in previous analysis of this type. These sorts of analysis have been proved to be wrong in referendum not least because there is uncertainty around any forecast, particularly in the long run, especially in the context of a major strategic choice.”

He said the civil service analysis “does not yet take account of the opportunities of leaving the EU”, and said ministers had to understand what went wrong with the previous forecasts before publishing more figures.

The minister also hit out at the journalist who obtained the leak, claiming he had produced “a selective interpretation of a preliminary analysis”. He described the leak as “an attempt to undermine our exit from the European Union”.

Baker told MPs it would be wrong to publish the work while negotiations were continuing because it would “surely harm the national interest”. He said the papers would be presented to MPs when they took part in a vote on the final Brexit deal.

However, Starmer said the response was “not good enough”, insisting parliamentarians were entitled to know the potential impact of Brexit outcomes. Criticising the way the government handled a previous demand to publish research into the impact of Brexit on British sectors, the shadow secretary of state added: “This is piling absurdity on absurdity.”

Tory MPs who are fighting for a soft Brexit also piled pressure on Baker, with Ken Clarke asking him to “stop pretending this is something to do with protecting our negotiating position” and instead accept that the government is facing political embarrassment.

Antoinette Sandbach, who represents Eddisbury in Cheshire, said the analysis suggested that local car manufacturing, chemical and food sectors critical would be badly hit. “Quite frankly, I take exception to being told that it is not in national interest to see a report that allows me to best represent my constituents,” she said.

Baker responded to colleagues by insisting the work was incomplete, and not acceptable to ministers.

He told MPs: “We can see what some of these economic forecasts – or some of this analysis can be worth. Take for example the respected Bank of England. What institution could be more respected for its analyses? But in August 2016 they made a quantitative forecast of the impact of Brexit – what did they say?

“They said that exports would go down by half a per cent but they went up by 8.3%; they said business investment would go down by 2%, it went up 1.7%; they said housing investment would go down by 4.75%, it went up by 5%; it said employment growth would be zero, flat, it went up to an all time high.”

It came after May talked her ministers through the leaked report at the start of cabinet, her spokesman said. She “noted media coverage of a report purporting to show the economic impact of Britain leaving the EU”.

“The PM said this was initial work, not approved by ministers, which only considers off-the-shelf scenarios. No analysis was made of the bespoke arrangement we seek as a matter of government policy, as set out in the Florence speech.”

There was no discussion of the report among ministers, the spokesman said. He declined to answer questions on who commissioned the report, whether May had seen it before it was leaked, or whether separate analyses existed of the economic impact of the Brexit outcome sought by the government.

Powered by Guardian.co.ukThis article was written by Anushka Asthana and Peter Walker, for theguardian.com on Tuesday 30th January 2018 16.16 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010