Today's Vote

The day before the last 3 general elections I usually say the most important thing you can do is vote, whoever that is for. If you weren't fully sure who to vote for, go with your gut. Because what matters Is having your say, using your voice - or risk being ignored by the politicians.

But tomorrow's vote is probably the most important any one of us have had or will have (perhaps with the exception of my Scots friends), so my message is going to be a little different. In this vote, you need to think long and carefully about the big issues at stake. I think you need to consider if you are informed enough to make an irrevocable change in the UK's relationship with its neighbours and its economy.

I'm an economist so that is what I know most about. It is not the only issue people are voting on, but it is one of the most important. On this the evidence is pretty overwhelming: being in the EU is good for our economy, and leaving it would damage it:

http://www.ifs.org.uk/publications/8330
http://www.ifs.org.uk/publications/8305

The line up of the vast majority (but not all) of economists, of international bodies like the IMF and OECD, of the UK's leading research institutes, of our allies around the world, and of the majority of businesses and trade unions, is not a conspiracy, it is a consensus.

I'm worried some of the claims you may have heard are outright lies.

We do not pay £350 million into the EU. We would if it were not for a rebate we negotiated 30 years ago.

And contrary to what you may have heard, that rebate could not be snatched away from us. We would have to agree to it going - and why would we do that? We could veto it!

You may also have heard that we might "get this money back" (in fact we never pay it in) but we don't get to control how it is spent. That's just not true. We have complete control over how we spend the rebate. And while the other money we get back for farms, our poorer areas (like the Welsh Valleys) and research comes with some strings it is our politicians in Westminster and Cardiff Bay that decide the specific rules for doling out the money, and the specific projects to fund.

It is true that we do pay in a net £150 million a week after taking all this into account. But leaving the EU would not free up this money to spend on the NHS or reduce pressure on our public services. To the contrary, the economic shock and potential loss of hard-working taxpayers from the rest of Europe would mean less money for our public services, cuts to tax credits, tax rises, or borrowing that falls on our heads (or children's heads) in future. Our economy would need only be 0.6% smaller than it otherwise would to cancel out those £150m savings. The consensus I spoke of earlier is that the economic hit would be much larger.

Now you may have heard that underlying these predictions are silly warnings that the UK won't trade with the rest of the EU if we leave. That would clearly be nonsense. But noone has said such a thing. Its a straw man created to knock down.

What economists have said is that trade would be more costly. The best we could hope for would be to get a deal like Norway but even that means customs checks for goods crossing borders, adding billions to the cost of trade, and the prices we pay. We'd also have to accept the main single market rules (without voting on them), make budget contributions, and accept the free movement of EU migrants. If we did not want that then we would get lesser access to the market, especially for our service industries like Finance, Law, Accountancy and Consultancy, which are vitally important to our economy and generate billions of tax revenues to fund public services. The better the trade deal we want, the more we need to accept the rules that come with being part of the EU.

You may also have heard that the same economists warning about trade, about the effect on taxes and public services, "got it wrong on the euro". This is simply untrue. Unlike now when there is a consensus among economists about the effects of EU membership on trade and the economy, there was a huge among of debate among economists about the merits of joining the euro. Indeed, economists at the Treasury helped Gordon Brown invent the "5 tests" that helped keep Britain out of the euro.

But perhaps the most pernicious lie is about the motivation of economists like myself. It has been claimed I'm not saying what I really think. I'm saying what I've been told to say by Europe or the government. Anyone who knows me will know I speak my mind. And they will know that I make my mind up after careful consideration of the facts, figures and evidence. The same is true of my colleagues and my fellow researchers - academic independence and objectivity is what we rely on to have our work taken seriously, and hence have a job at all. Whatever the result of the referendum, it will be tragic if people turn against "experts" who far from being in the pocket of their paymasters, do their best to scrutinise the workings of government, the EU, and the various campaigns trying to pull you one way or the other.

So if you are planning on voting on one of these lies, it might be worthwhile thinking again.

That does not mean I'm saying you should definitely change your mind though. You may object to the French and Germans having a say over some rules and regulations applying in the UK. You may simply want fewer EU migrants, even in the knowledge that that won't mean more jobs for young Brits, or better public services. You might just want Britain to feel more British.

Those are valid reasons to Vote Leave if thats how you feel.

But, please vote with the knowledge that nearly all the economic evidence and analysis that has been done really does suggest you'd have to accept being a grand or two worse off, on average, to "take back" that control. I can’t tell you how to trade these things off, how to make this choice. I can tell you that Brexit would almost certainly make us, economically, poorer.

Well said! I really don't think this referendum should have happened at all because even slightly more reasonably informed plebs like me should not be making decisions of this magnitude about the country's future, that's what we elect MP's and AM's (MWP's ) for.

If people are undecided then they should vote 'Remain' because it leaves the possibility of leaving in the future but if we leave it will be virtually impossible to rejoin.

You're an economist who couldn't see the financial crisis of 2007 coming.

You're an economist who works for the IFS, which is part-funded by a number of EU institutions http://blogs.channel4.com/factcheck/ifs ... sion/22984

You're an economist - economical with the truth, or so it would seem.

You've made my mind up.

I went to Wales v Slovakia in Bordeaux. I love Europe. I love France. But I hate the lying, corrupt, self-serving, sinister, bullying EU.

RC- I think you're probably spot on with your synopsis of the most likely economic impact. The evidence is close to overwhelming - but who wants to hear 'boring' factual evidence when rage, cheap indignation and bluster are easier to dish out on the doorstep?

The whole debate appears to have been directed by a scheming elite of sophists (Johnston etc) who have miraculously managed to persuade the working class folk that relatively poor public service provision , coupled with a weak industrial strategy followed by successive UK Goverments (which has eroded their jobs base) is actually all the fault of the EU. It has been a very clever strategy indeed.

I'm surprised that there is so little focus from the electorate concerning what the likely domestic political consequences will be tomorrow if Boris, Nigel & co manage to lead us out of an Institution that, lest we forget,was awarded the Nobel Peace Prize in 2012.

Mr Blue Sky.

Do you know what a non-sequitur is? You should, because like most Outers you seem to be a big fan of them.

1) You are correct, that I did not forsee that a financial crisis would hit in 2007. The fact is very few people got the timing and scale of the crisis correct - economists and non-economists. And the whole thing with big market crises is that in general you cannot predict when they will happen. If it were straightforward to predict then you would react in advance and you would never get to the shock in the first place. Booms would dissipate slowly before they turned to busts. Financial bubbles would be popped before they grew too big to cause too much harm.

Now the EU referendum is different. This isn't an event that might happen at some unknown time in the future. It is an event that could happen today/tomorrow. It is an event for which we know the general parameters: reduced access to the EU's single market and markets with which the EU has trade deals; but a protracted period of uncertainty about future trading and investment relations with Europe as the precise nature of this deal is unknown (we just know it will be less good than now - and we really really do know that!). While trying to predict the timing of a shock is a mugs game, economics really is much better at looking at the relationship between ease-of-trade and prosperity (its positive) and between uncertainty and prosperity (its negative). These are the kind of relationships you can estimate after trade or financial shocks exist - they are estimates of the effects of shocks, not predictions of when they will happen.

And we know Brexit will be a shock! A quick look at the pound and FTSE over the last couple of weeks as the polls and betting markets moved for and against Brexit shows that the markets - which are what drove the 2007-09 crisis - have a pretty good idea that Brexit would be bad. And such market reactions can become self-enforcing prophecies, as we saw in 2007-09.

So what is your non sequitur. You have noticed that I, like so many others, failed to predict something inherently very unpredictable. But the fact I made this "mistake" is not a reason to dismiss my warnings of the economic effects of Brexit, which are based on very different kinds of analysis and modelling. It just does not logically follow. The only logical way to challenge these predictions is to say what it is about this specific analysis you object to. What assumptions about effects of trade deals on trade volumes and trade volumes on prosperity? What assumptions about the type of trading arrangements we may get?

2) The IFS gets 10% of its funding from the European Research Council, which is funded by the European Union.The IFS also gets around half its funding from the Economic and Social Research Council which is funded by the UK Government. Now I think you'll remember all the times we have criticised UK government policy, UK ministerial statements, opposition party proposals, etc. Why would we do this if we were government and EU-funded stooges?

The whole point of the ERC and ESRC is that they are wholly independent of the EU and UK government, awarding funding on a competitive basis only in response to proposals for research of world class academic quality, which are subject to external peer-review.These are the same bodies that fund research in universities in the UK (and work in other countries both in and outside the EU). To suggest that the IFS “works for government” because of this funding arrangement, and that what it says is affected by that, is tantamount to suggesting that this is true of all university based academics. In fact these funding bodies operate explicitly to ensure distance between government and researchers as a way of ensuring academic freedom is protected. And as a response to that it is actually in the IFS's interests to be fiercely independent and say what the evidence leads us to conclude. Because put simply, our entire funding and our entire influence relies on us being independent and objective in that way.

Put simply, my job relies on doing good research and being objective. I would not have a job if we were to move away from that way of working, and were to lose our hard won reputation built up over many decades. If I was so self-interested would I risk losing my job?

More fundamentally, if I didn't believe what I was writing. If I thought actually we would be economically better off outside of the EU, shouldn't I actually write that? Because doing so would (a) lead to a bigger economy, leading to more tax revenues and funding for "government stooges" like myself, and (b) please the new paymasters who would follow the referendum who would surely reward my loyalty. So if I really did feel the economic evidence was pointing towards Brexit being good for the economy - I would actually have all the incentive to say so!

So thats your second non sequiter.

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So your arguments for why you don't believe the judgement of myself and the vast majority of economists do not stand up. Now maybe you have other, better thought out reasons. Objections to the assumptions underlying the models and analysis.

Or maybe you want to play the man rather than the issues. It was a rather depressingly successful tactic, after all...

Random Comment.

How incredibly patronising you are. I passed Latin O level so I probably knew what the phrase meant before you were born.

You have a damned cheek to start a thread urging people to vote remain while claiming to be neutral. Your wages depend, in part, on the EU. Bringing other funding streams into your "argument" is a poor attempt at diverting readers from the fact that you are not impartial.

You and your think tank ilk - funded at my expense - are yet another manifestation of the third-sector gravy train whose lines begin and end in Brussels.

I knew that the finanicial crisis was coming in 2007 and took action. That is because I am an independent thinker, not a conceited drone who probably loves his reflection even more than his constant self-promoting whining.

Mr Blue Sky - you would note that I have not urged people to vote remain. Thats not my purpose at all. My purpose is for people to vote with the full knowledge that there is a strong consensus among economists, based on numerous studies and analyses, which suggests there will be an economist cost of leaving the EU. Being objective and impartial on a topic is not the same as sitting on the fence and being assiduously neutral.Its about looking at what the evidence tells you and drawing your conclusions based on that, not based on your ideology.

In any case, I know that economics isn't all people are voting on. They are also voting on issues like sovereignty and migration. As I say these may lead you to favour voting leave. I just want people to know there is a trade-off here. Its completely up to them how they decide to vote - I would never tell someone how they should vote once they are armed with the information to make up their own mind!

And the rest of your rant doesn't even warrant a response.

I voted Remain but I think RC may be over-stating the economic benefits of staying in. It's all well and good to talk about growth but I'm not sure we have a huge problem in terms of the size of our GDP. The problem is that the distribution of that GDP is extremely uneven. Median wages are not too great. Many people are in low skilled low paid jobs and there is little sign of it shifting. Productivity is woeful. Ultimately if we want high living standards, good quality public services and sustainable public finances we need productivity growth. Why might the EU be a problem here? Because the large numbers of EU migrants provide an almost endless supply of cheap labour for businesses. There's then less need or incentive to invest in new technology or innovate - the things that really drive improved economic performance in the long run.

There's another factor that tempts me towards Brexit - and I admit it involves a little schadenfreude. Quite possibly the biggest loser from us leaving the EU would be the City of London. Institutions would surely have to re-locate some of their activities and the financials sector would have to be scaled down. This actually might help re-balance the UK economy away from financial services and could be of benefit to the other UK regions. Fanciful? Well it's an idea suggested by another Nobel prize winner, perhaps a more deserving one than the EU.

http://www.nytimes.com/2016/06/17/opinion/fear-loathing-and-brexit.html

So why do I want to Remain? Well I'm about as lukewarm towards staying as Paul Krugman's article suggests he would be. The economy might re-balance to some extent away from the City, house prices might fall - particularly in London where many people can no longer afford to live - and actually 'control over our borders' might give people a greater sense of security and more inclination to vote for a progressive government. But there's no guarantee of any of this and whilst it's all well and good to kick the establishment we might very quickly find ourselves with a new pro-Brexit establishment who's main ambition is to turn London into Singapore. Needless to say those in the Valleys wanting their country back may feel quite disappointed. It would be far better to have the sort of changes I'm suggesting proposed by a sensible government with a plan rather than forced on us by circumstances. The grass isn't always greener.

Frank. Those are all really interesting and well considered points.

The links between the availability of labour and incentives to boost productivity is one of the factors that has been suggested for low productivity growth in recent years. Immigration would be one of several factors pushing up labour supply - the others being more older people working, and welfare reform, which does seem to be encouraging an increase in labour supply among lone mothers and some other groups.

However, in the context of immigration, most studies find little evidence of an impact on wages - which would reflect productivity-, even at the bottom of the labour market. The best study I've seen, which looks at the links between migration and wages at the local level suggests since 2004, EU migration may have reduced wages of low earners by 0.6% relative to what they would otherwise have been. Its not a perfect study admittedly and if anything might understate the effects a bit - because of economy-wide effects, rather than local effects. But it points towards any impact of migration on wages (and employment of natives) being modest. It certainly wouldn't be anywhere near enough to explain our recent abysmal productivity performance (countries with similarly high levels of net migration, like Sweden, Canada, the US, Australia, have done OK on productivity too).

Re: the City of London. I do not think that a smaller, less successful City means a more successful rest-of-the-UK. In particular, significant revenues from London are redistributed to the rest of the UK, including Wales. The immediate effect of losing these revenues would be to make it harder rather than easier to grow local economies - a loss of demand and a loss of resources to invest in our supply side. And we should not forget the negative impacts on the rest of the country - indirectly from London (commuters, nearsourcing and trading with London-based firms) or directly from firms trading with Europe, FDI, EU funded projects etc.

What our regions really need to compete more is more investment and to retain more of their talented people (who currently move to London). Brexit would likely see a reduction in the funds available to invest for the reasons outlined above. In terms of human capital, I think it could go either way. A less successful London might mean more people stay in Manchester or Glasgow or Cardiff. Alternatively, these cities could suffer if more Brits move to the capital to replace those rest-of-EU citizens who leave (or never arrive) or take advantage of those lower house prices.

So I agree - the problems with the UK are not just about the rate of growth. They are about sharing the proceeds of growth, across the distribution and across the country. I'm just not sure leaving the EU would help with either, and the balance of evidence is for a noticeable long-term knock to the overall size of the economy.

I'm an economist so that is what I know most about.

I think others have thrown scorn of you diatribe piece of utter rubbish!

The fact is the UK is already outside the EU, by not having the Euro and it will never have either in or OUT
This is what most "economists" said was vital for the UK to continue to trade with the rest of Europe, we must join the euro.

Have a good laugh at this classis BBC News link
http://news.bbc.co.uk/1/hi/business/1371736.stm

Our membership of the EU has made our country more prosperous...joining the euro would safeguard those gains.

So says Leading Economists

For a single currency to work properly then there has to be harmonised taxation/productivity/law so ever closer Union.
Look at Greece and the way the European tin hat brigade kick the can down the road.

The only sensible way forward is to leave this corrupt Union set up for it own end and be in charge of our own country again.