Economic Analysis: Focus on EU Trade and Stop Invoking the Bogeyman | London Evening Standard



o What do builders think of the Chancellor’s latest scare bomb to win next month’s referendum on EU membership – a potential 18% drop in house prices after a Brexit vote? In short, not much.

My lunch mate, the boss of a listed home builder, had only one word for predictions of an 18% drop in house prices in a “severe shock” for the economy – “laughable”. “It makes me angry,” he added. “Why is the housing market different from June 24 to 23? The UK has a housing shortage, and it’s not going to go away overnight.

The central London market may be quiet, but elsewhere in the real world potential buyers don’t care about the referendum. There was no relaxation of the activity, adds my companion – besides an outside -.

Building society Nationwide, meanwhile, tells us that competition in the mortgage market is so intense that its profits will be reduced this year.

It’s hardly like Armageddon there. But this week’s Treasury “analysis” raises the prospect of rising household interest rates amid heightened uncertainty and a weaker economic outlook in the event of a clearing vote.

He gloomily hints that his scenario ignores the “sharp tightening of fiscal and monetary policy” that may be needed to restore credibility, even though Bank of England Governor Mark Carney has told MPs this week that “you wouldn’t expect the Bank to stand up.” on the way to the necessary adjustment of the exchange rate ”. On the contrary, an even greater relaxation of the monetary corset seems likely; favorable to the economy at large and, indeed, to housing prices.

Treasury warns of further borrowing of £ 39bn in the wake of Brexit and the resulting blow to the economy, undermining the Chancellor’s goal of achieving a surplus by 2019-20 .

Frankly, judging by this week’s low borrowing numbers – despite record stamp duty revenue – George Osborne is more than capable of missing that target on his own with or without a leave vote, and earlier he admit it, the better.

And the idea of ​​a future chancellor visiting a series of terrifying spending cuts and tax hikes on a post-Brexit UK is fanciful, not least because the likely Tory leader – Boris Johnson or Michael Gove, say – would simply not allow it.

Playing the “house price” card is just the latest cynical exercise in a desperate Remain campaign to “break through” the British people four weeks from the big day. It’s practically a carbon copy of last year’s election campaign with its rigid message discipline, but how many voters will be put off by the hysteria creeping into the pro-EU camp?

I would love to hear a more positive argument for staying rather than trying to scare people away with spurious predictions and scenarios.

Let’s be clear: I don’t like democratic loopholes and EU follies, like spending € 180m (£ 137m) a year moving from Brussels to Strasbourg every month. But I love having access to a trading bloc of 500 million people – who are stronger together – and now is not the time to go it alone or try to make other deals.

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The latest monthly trade monitor from the Dutch Bureau of Economic Policy Analysis, reported by Dutch bank ING, underscores this point. World trade fell 1.7% in the first three months of the year, erasing half of the recovery seen in the second half of last year. In March, world trade fell by 0.5% while imports fell in the euro zone, Japan and especially the United States.

Looking back 200 years to economist David Ricardo, one of the few things the profession can agree on is that commerce makes us richer; and being part of the world’s largest trading bloc rather than outside – given the current climate – seems reasonable.

Naive I know, but why aren’t politicians treating voters like adults for the last four weeks of this campaign rather than scare us with the bogeyman?


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