UK Government and Bank of England BrExit Economic Armageddon Propaganda
Politics / BrExit Nov 29, 2018 - 12:45 AM GMTBy: Nadeem_Walayat
Hours after the UK Government published it's economic consequences of a NO DEAL BrExit, forecasting a 9% loss of GDP after 15 years. The head at the heart of Britains banking establishment, the Bank of England set forth it's NO DEAL Economic Armageddon scenario, literally warning of economic collapse on a scale twice that of the 2008 Financial Crisis. One of a near immediate NO DEAL currency collapse, GDP collapse of 9%, house prices crash of 30% and inflation soaring to over 6.5%. The people of Britain being subjected to Operation FEAR on an even greater scale than that which the Bank of England was peddling prior to the June 2016 EU Referendum, then warning of a BrExit recession if the people of Britain voted for freedom, NONE of which materialised as the UK economy continued to grow on a similar trend trajectory it was on as before the EU Referendum BrExit result.
A summary of the of UK Government and Bank of England's forecasts of what they expect to happen to the UK post Brexit coupled with my own forecast as of Feb 2016.
Here's a reminder of Operation Fear at work BEFORE the EU Referendum which we had Mark Carney warning of a recession if the people of Britain voted for FREEDOM on 23rd June 2016. A recession that NEVER materialised!
13 May 2016 - Mark Carney Warns of 'Technical Recession' if British People Vote for BREXIT Freedom
Mr Carney stated the June 23 vote as "the elephant in the room that would mean a materially lower path for growth and a notably higher path for inflation. The pound could fall sharply following a vote to leave, pushing up inflation as imports became more expensive. Although a weaker pound would boost exports, this would not offset the damage inflicted by Brexit, as higher inflation hits incomes and living standards.
A vote to leave the EU could have material effects on the exchange rate, demand and supply potential. The consequences could possibly include a technical recession."
Whilst the Bank of England MPC warned : The most significant risks to the MPC’s forecast concern the referendum. A vote to leave the EU could materially alter the outlook for output and inflation, and therefore the appropriate setting of monetary policy. Households could defer consumption and firms delay investment, lowering labour demand and causing unemployment to rise. At the same time, supply growth is likely to be lower over the forecast period, reflecting slower capital accumulation and the need to reallocate resources. Sterling is also likely to depreciate further, perhaps sharply. This combination of influences on demand, supply and the exchange rate could lead to a materially lower path for growth and a notably higher path for inflation than in the central projections set out in the May Inflation Report. In such circumstances, the MPC would face a trade-off between stabilising inflation on the one hand and output and employment on the other. The implications for the direction of monetary policy will depend on the relative magnitudes of the demand, supply and exchange rate effects. Whatever the outcome of the referendum and its consequences, the MPC will take whatever action is needed to ensure that inflation expectations remain well anchored and inflation returns to the target over the appropriate horizon.
The bottom line is that FREEDOM does carry a price, which I estimated BEFORE the EU referendum would cost about 2% of GDP:
03 Feb 2016 - David Chamberlain Cameron, Britain's Last Chance for Freedom From Emerging European Super State
The Price for Freedom
The truth is that a BREXIT WILL BE ECONOMICALLY PAINFUL despite all of the benefits of being outside of the E.U. The cost of BrExit will be anywhere from 2% to as high as 5% of GDP if the euro-zone is determined to make an example of Britain to act as a warning to others by raising punitive tariffs on trade. However remember that attaining FREEDOM ALWAYS carry's a PRICE, in which respect even the worst case scenario for a 5% loss of GDP in the grand scheme of things does not compare against the infinitely greater price the people of Britain paid for their freedom in both past World Wars and so it is now THIS generations turn to pay a price for the freedom of future generations.
What the people of Britain need to fully understand is that this really is their VERY LAST CHANCE for Freedom!
And confirmed in 2 extensive pieces of analysis following Britain's vote for BrExit, with my expectations that freedom would cost Britain 2% of GDP which has remained my forecast expectation since.
04 Jul 2016 - BrExit Implications for UK Economy, Interest Rates, Bonds, Markets, Debt & Deficit, Inflation...
04 Jul 2016 - BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics...
1. UK Economy - 2% GDP Price for Freedom
The UK economy WILL take a hit as I have often warned to expect a loss of GDP of between 2% and 4% over the next 2 to 3 years depending on Europe's stance taken during the BrExit negotiations, where the early voices from the likes of Juncker are very threatening demanding that the UK immediately starts the process for leaving the EU by means of triggering Article 50. However, I think things will calm down and Europe will become more amicable than today's rhetoric because europe is structurally and symmetrically very weak that Brexit has just weakened further. So in terms of GDP the hit will probably turn out to be closer to 2% then 4% as more sensible heads start to prevail.
The bottom line is that the political and banking establishment elite remain determined to subvert BrExit through the heavy use of state economic propaganda of ever escalating warnings of financial armageddon that WILL NEVER materialise aimed towards either forcing Theresa May's disastrous deal or a Second Referendum onto the people of Britain.
So Yes there is a cost to FREEDOM, which in my long standing opinion is a price well worth paying and thus a NO DEAL Brexit IS in BEST interests of Britain regardless of what Operation Fear attempts to perpetuate.
Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
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