Richard North, 01/06/2016  

With an acute lack of self-awareness, both the Telegraph and Laura Kuenssberg of the BBC are amongst those leaping on the bandwagon to denounce the inadequacies of this referendum campaign.

The Telegraph is particularly prominent in questioning whether the referendum campaign been anything more than "a circus of ambition", seemingly oblivious to its own role in promoting the biff-bam confrontation between its favoured scribe, Alexander (aka Boris) Johnson, and David Cameron, dragging the whole issue down to the level of personality politics.

The Telegraph too has been ruthless in censoring its own and guest writers, excluding material not approved by its corporate masters and defining the "line to take" – a habit shared by other newspapers. The very last thing any of the national titles want is independent thought or free expression.

Meanwhile, for once, the Independent we get a halfway decent article which does much to illuminate the state of the current debate. Written by Ashoka Mody, former deputy director of the IMF's European and Research Departments, it is headed "Why the economic consensus on Brexit is flawed". Arguments that leaving the EU would cause permanent damage to the UK, he says, are not supported by evidence.

In his view, if we go back to core principles in assessing the impact of Brexit, we reach the conclusion that economics is neutral on whether to leave or remain. The battle for Brexit must be fought on other grounds.

The essence of what he says is that, whatever scenario international traders are confronted with, they will eventually adjust and all productive trading relationships will remain intact. British trade with Germany will not decline significantly and even if trade with the EU falls, trade with other regions will undoubtedly increase.

There may be, says Mody, a transition cost and it is possible that GDP will be lower by about half-a-percent in the peak transition year. But the costs will be modest and short-lived. The Treasury, OECD and the IMF, however, conclude that Brexit could force a permanent reduction of GDP by between 6 and 10 percent forever. The bulk of those large estimates, though, come from the assumption that reduced trade will shrink British productivity growth.

Mody considers this "disingenuous". There is simply no evidence, he says, that less trade lowers productivity growth. There is not even a logical connection between productivity growth and a shift in trade from Germany to the United States.

More trade has been associated with higher productivity growth when countries have emerged from economic isolation. But for the sophisticated British economy, this possibility should be completely dismissed.

With that, Mody considers the Bank of England's claims the most outrageous of all. It is building a narrative of panic, which could become self-fulfilling. The central bank's proper role is to reassure and stand-by to stem panic.

Since 2010, official agencies have repeatedly promised global recovery. The forecasts fail because they all disregard inconvenient evidence. Now, Mody concludes, the official consensus on the economic costs of Brexit has crossed the line into groupthink. A numerical illusion is masquerading as a "fact". And when those in authority distort facts, they also subvert the cause of democracy.

To have this very trenchant opinion is extremely helpful, and its wider circulation would be even more so. But, one suspects, Mody is speaking as an economist, which puts him somewhat at a handicap. He is addressing not economics but an intensely political subject.

Therein lies a huge distinction. Undoubtedly, the Treasury, OECD and the IMF are relying on their prestige as economic authorities, but they are acting entirely politically. And, as we have remarked previously, they have been exploiting the "leave" campaign's lack of a coherent exit plan.

Thus, their pessimistic economic projections do not represent real life. Rather, they occupy the space created by this absence, effectively taking the leavers' own scenarios at face value.

The leavers themselves are trapped by the inherent conflict in their own expectations. They want "free trade" with EU Member States, on the same or equivalent terms that we enjoy at present, and they want to abolish "freedom of movement" – whatever they assume that to be. The problem is – which they have wholly failed to confront – is that they can have one or the other, but not both.

In fact, what the "leavers" actually want has never been properly articulated. Their "free trade" is a miasma, and their desire to reduce immigration (or eliminate it entirely) would be – even at best – only marginally affected by leaving the EU.

Should by some accident we actually win the referendum, therefore – forcing the UK government into invoking Article 50 - it is most unlikely that any of the "leaver" scenarios would be adopted. For sure, the government would go through the motions of leaving, but the end game would be very different from any expectations currently being mooted.

Given that Mr Cameron is not committed to leaving office until the 2020 general election, he could well confound any expectations and lead the initial negotiations, thereby totally frustrating the more extreme expectations – and the ambitions of Messrs Johnson and Gove.

All this, though, is completely unknown territory. All we can predict is that the outcome will be very different from anything being discussed.

Of one thing we can be sure, though, a government which is forced – unwillingly – to go through the process of negotiation, will undoubtedly look to minimise risk. It would not permit a disaster scenario to unfold. Most likely, therefore, it will bring back something close to an EEA-type arrangement, protecting UK participation in the Single Market. Immediate cessation of free movement is most likely an empty dream.

With that, Mody's prediction that international traders will adjust and all productive trading relationships will remain intact, is probably very close to the mark. "Project Fear" is simply a fiction devised for internal consumption. It could never happen and is not intended to happen. The "consensus of fear" is indeed flawed.

The stupidity of it all is that "Project Fear" could so easily be neutralised by pointing out that no government could or would ever allow the worst projections to come to pass. The most logical outcome would be the plan of which no one dares speak its name.

We are, thus, in the absurd situation of having the "remains" warn about the consequences of scenarios they know will never happen, based on ill-founded and vague ideas promoted by the "leavers" that can't ever happen – both sides dancing around fictions of each other's creation.

That means that the real "consensus" is an agreement to be unreal. We debate about non-events, things that will never happen and spend no time at all considering what might actually happen, and how to deal with it. No wonder so many feel the campaign is unreal – that is precisely what it is.

In the context, "flawed" doesn't even begin to describe it.

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