Brexit will not bring forth an economic doomsday, but it will invite uncertainty

The problem for the Leave camp is that they have yet to make the longer-term economic case for Britain

Many national and economic authorities have voiced their economic opinions in the Brexit debate

Immigration, sovereignty and geopolitics are all important factors known to be swaying the voters; but, if the recent swing towards the Remain campaign is anything to go by, it is the steady intense artillery bombardment of economic statistics that is starting to determine the way we will vote in less than a month’s time. Call it fear, if you will, but it is winning the debate. But can we trust the numbers, including the latest, produced by the Institute for Fiscal Studies, suggesting that if Britain left the European Union we would be forced to endure yet more austerity?

The litany of national and economic authorities is certainly an imposing one: HM Treasury, the Bank of England, the Organisation for Economic Co-operation and Development, the IMF and various other think-tanks and institutes, with varying degrees of respectability, have endorsed the basic assumption that there would be an immediate shock to the British economy, and a slowdown in growth, in some cases to the point of recession. Not all, to be fair, have a vested interest in the EU, though they do like to flock together. Once the idea that the UK’s GDP will be damaged by Brexit is accepted, the consequences are as far reaching and universal as economic activity itself. Thus, if the public finances suffer, as the IFS suggest, then spending on the NHS, on defence, on schools, on pensions, on libraries, on the army, on the DVLA and the national parks suffers too.

With lower tax revenues, the Treasury under any government would have to consider more tax increases or reductions in public expenditure to rebalance the public finances. If national income slows then property values will suffer, as will job creation and the profitability of British business. If the pound weakens and interest rates are higher than they would otherwise be, then that too will have an impact on inflation. Such effects dwarf whatever our contribution to the EU budget might be.

Of course, all of these august bodies could be guilty of “groupthink” of the kind that failed to see the financial crash of 2008 approaching, and then failed to know what to do about it once it had taken its deadly grip. As the Eurosceptics point out, most of these organisations were at least favourably disposed towards joining the euro in the 2000s, from which Britain had a fortunate escape (due in no small measure to the then-Chancellor, Gordon Brown).

The same type of highly qualified economic heads over the decades have advocated joining the Exchange Rate Mechanism, maintaining a prices and incomes policy, a fixed exchange rate for sterling against all other currencies and, if we go back still further, gold and the rigidly balanced budget. All were the received conventional wisdom at the time; all were in the end disastrous and had to be reversed.

So we should look upon the balance of economic opinion in the European debate with some scepticism. That said, the experts are not necessarily wrong because they all agree – they all, presumably, would agree that the earth is not flat – and the risks involved in leaving the EU seem real enough. As the IFS argues, whatever access the UK eventually gets to the European market would necessarily be less than it enjoys now. Uncertainty would inevitably follow – it may not be for as long and be as damaging as often supposed, but it would necessarily be there.

The problem for the Leave camp is that they have yet to make the longer-term case for how Britain can go out into the world and make its way in the fast-growing emerging and developing economies they rightly point to as “the engines for future global prosperity”. Why would it necessarily be easier if we were outside the EU? If we leave the EU, how does that make it easier to export to China? Easier for a British company to acquire a business in South Korea? Easier for a British engineer to get work in India?

How, then, would it be possible for British companies and workers to make up for their lost access to the single European market, a huge and prosperous, if rather a stagnant one? The supposed answer to that is that, freed from the burden of social costs and bureaucracy imposed by European institutions (though acceded to by British representatives), the dynamic free-market free-trading entrepreneurial UK would be internationally competitive, and able to overcome the hurdles of tariff and other barriers in China, India and other markets.

That, in essence, is a more improbable proposition than the ones the economic establishment are currently peddling, and that is why the Brexiteers are losing the argument – and will lose the vote.