You are here:   Columns >  Marketplace > Project Fear was £100bn out

Osborne himself is not and never has been an economist, and — to give him his due — he does not claim to have serious economic expertise. Nevertheless, at the time Project Fear was so widely reported that some people do seem to have believed it. To the extent that it was credible, it was credible because it had the endorsement not just of the Treasury, but also of a handful of UK-based research institutes, notably the National Institute of Economic and Social Research, and the Institute for Fiscal Studies. This suggests an alternative interpretation of Project Fear: that the economists deriving and articulating its pessimistic forecasts were acting in good faith. They did believe what they were saying and managed to convince Osborne about the iniquity of Brexit.

On June 28, 2016, Paul Johnson, then and now the Director of the Institute for Fiscal Studies, wrote a piece for The Times in which — with less than a week of evidence in support — he said: “We economists were collectively right about the economic consequences of leaving the EU. Sadly, as events are already proving, those consequences will be bad, possibly very bad. The UK economics profession had a good referendum.” The trouble — in Johnson’s view — was that either the public was not listening or it was too dim to follow the debate properly. To quote again, “Economists’ warnings were not understood or believed by many. So we economists need to be asking ourselves why our near-unanimity did not cut through . . . We need to understand the abject failure of our profession to persuade the public about the consequences of a Leave vote.” (The minority of economists favouring Brexit was later described by Johnson as “disappearingly [sic] small”, consisting of “a few mavericks”. Dear reader, you may have guessed that I am one of them.)

The only possible verdict on Johnson’s article is that he believed the Project Fear analysis hook, line and sinker. He really did think in the days following the Brexit vote that the next few years would be followed by a deep recession, just like most Treasury mandarins and such commentators as Martin Wolf on the Financial Times (whose position I discussed in my Standpoint column last September). The truth about contemporary economics and economists cannot be escaped. So many of these people — belonging to what they term “our profession” — were parroting each other, and persuading themselves of doom and disaster ahead, that Johnson’s reference to a “near-unanimity” has to be taken at face value. By extension, Osborne may not be a Svengali who corrupted the civil servants around him, but the innocent dupe of utterly incompetent and useless advisers who were carried away by their own tosh.

Project Fear was a gross miscarriage of government. I do not know which of my two explanations is right. It may be that Osborne breached the conventions of our unwritten constitution and abused the authority of the Treasury to give substance to lies. Or it may be that the only advice Osborne (and Cameron for that matter) received came from a “near-unanimity” of official economists who had no idea what they were talking about. Perhaps there was a mixture of malice and ignorance, of wicked politics and trashy economics, and that — as usual with other policy blunders in recent decades — it was more cock-up than conspiracy. At any rate, the debate about the long-run benefits and costs of Brexit is open. Some of us, whether disappearingly [sic] few in number or not, will remain optimistic. 
View Full Article

Post your comment

This question is for testing whether you are a human visitor and to prevent automated spam submissions.