More disparagement of British freedoms from the Europhile camp

In a 1,500 word article in the Business Section of the Daily Telegraph (30th May), Sir Victor Blank inveighs against those who, like this writer, long for Britain to be an independent nation again, a status shared by 166 other countries of the world including of course the USA and our kindred nations of the Commonwealth: Canada, Australia, New Zealand.  That’s all we wish for – self-government – the freedom for us, and only us, to vote for those who pass the laws which govern us.

Some readers may remember Victor Blank – the Chairman of Lloyds Bank (2006-December 2009) i.e. at the time of the banking crisis, chief architect of its disastrous takeover of Halifax Bank of Scotland (HBOS), then itself effectively taken over by the British government with a 43% stake in 2009. This stake was classified by the European Commission as state aid and required Lloyds to sell part of its business with all the massive costs and staff dislocation thereby entailed.

If Britain had been an independent country, Lloyds would not have had to do this, but judged by his article Blank doesn’t seem to understand this.

Thus we British freedom fighters are described as having “rounded on the ‘experts’ and questioned their objectivity”. The experts listed include Mark Carney, whose forecasts of an interest rate rise have been confounded so often since he took over as Bank of England Governor, that he has given up making any.

The “expert” forecasters of Britain’s economic collapse after Brexit: the Treasury, the World Bank, US Presidents, 300 odd economists – according to Blank: “choose their words carefully, based on minute research and analysis”.

Results of “Expert” Analysis

The results of such “minute research and analysis” were perfectly captured by HM the Queen, when, on a visit to the London School of Economics (LSE) in November 2008, she asked as Lehman Brothers was collapsing, “Didn’t anyone foresee this?” “This” meant the other banking collapses and rescues which Victor Blank’s company was a big part of.  Eight months later, LSE Professor Tim Besley, a member of the Bank of England’s Monetary Committee, sent a three page missive to the Queen which blamed “a failure of collective imagination of many bright people”.

Although not “bright” in the self-regarding estimation of lots of “experts”, many people did see that the borrowing spree, which the Chancellor of the Exchequer Gordon Brown had unleashed in the seven year period up to the crash, in order to boost fictional “growth” in the British economy (and his own reputation as he thought), would end in tears as it did in the autumn of 2007. Every single “expert” body was complicit in this disaster as the following table, put together by Neil Gibson[1] of Oxford Economics demonstrates.

UK GDP forecasts before and during the Recession 2007-2009


Year 2007 2008 2009
Actual GDP growth % 3.9 -0.7 -4.1
Forecasts 6 months to 12 months ahead by:
Goldman Sachs Investment Bankers 3.0 0.8 1.8
Union Banque Suisse 2.9 0.8 1.7
Cambridge Econometrics 2.7 0.8 2.3
Barclays Bank 2.9 1.0 1.6
Oxford Economics 2.8 0.7 2.2
International Monetary Fund (IMF) 2.9 1.0 1.6
OECD 2.7 0.8 1.7
Citibank 0.7 2.7
Lloyds TSB 3.0 0.8 1.8
Average of the forecasts 2.86 0.80 1.99

Many of the usual suspects in the government’s “project fear” of Brexit are represented in the table.

Chief characteristics of Expert Forecasts

  1. They are all seriously wrong in the same way. In the two crisis years they actually did not predict a recession at all (hence the Queen’s question). Victor Blank’s own company was the most wrong of all in 2009.
  2. They are all extraordinarily in agreement in the years 2007 and 2008.

Treasury Forecasts

It is clear that all “experts” in the table are using basically the same model, which has no useful predictive power, even over a period as short at 6 months. This is born out every month as the Treasury (which consults many of these forecasters) constantly revises its forecasts of growth for the quarter ahead – currently revised down from 0.4% to 0.2% for 2016 Q2 – which we are currently in! The general public is right to query the expertise of these “experts”.

How can the Treasury and others pronounce so confidently on the British economy after Brexit, one, two, fifteen years ahead – which is what the Treasury has recently published[3]?

How, in the light of the table, can they or anyone take them seriously? With no remotely credible model of productivity (output per person) they confidently “predict” that the annual loss of GDP per household would be £5,200 by 2030 precisely – not £5,100 or £5,300.

Pronouncement of corporate business

As in the disputes over the ERM; the Maastricht Treaty in 1992; the future of the £ in the late 1990s; corporate Britain has been prominent in expounding the anti-independence view.

Thus in November 1992, after Britain had left the ERM, 27 of the CBI bosses all wrote to The Times of 2nd November 1992, saying “we should not close off the option to re-enter”, not apparently understanding that under Article G, Title 6, of the Maastricht Treaty, the ERM was but the first stage of monetary union (i.e. abolition of national currencies, including the £).

Notwithstanding their being told of this reality[4], 15 of the 27 were back again in 1996 with the same argument of the terrible effects of “our self-imposed exclusion from Economic and Monetary Union (EMU) which would be deeply damaging”[5]. Those of us who opposed EMU for Britain were (still are!) guilty of a “serious misunderstanding both of the process of monetary union (i.e. abolition of the £) and our interests as a trading nation”[6].

Victor Blank’s article

Now they, or their successors in office, are at it again – with the tired old slogans of the corporate rich (quotes from the article):

  • “We need to be part of a vast market”.

Note the slippery word “part”. As a free people once again we just want and expect to trade with the EU, like the USA and Switzerland do, without being “part” of its political structures, aimed at creating a United States of Europe.

  • “The Brexit Brigade (that’s at least half of the British population) clings to a Little Islander view of Britain, harking back to the days when we were a world power”, etc. etc.

Actually it’s the Europhiles who hark back, not to Britain’s imperial past, but to someone else’s past – the Holy Roman Empire, Charlemagne, perhaps, but we are too polite to say so.

  • “The era of the small nation state is gone”.

Is Switzerland such a small nation state that it can only be “effectively represented by a large block (sic) in trade negotiations”? Actually Switzerland has the highest per capita exports to the EU of any country (including Germany to the other EU-27) and 27 trade agreements with the rest of the world, including the EU.

Why do Blank and Co talk such nonsense?

Victor Blank is talking defeatist nonsense about Britain’s future as an independent country, like his corporate predecesors in the 1990s, like the bosses, the think-tanks, and the international organisations (like the OECD and the WTO) do today.

This is because they all make the same basic assumptions – bigger is better and officials like themselves are best of all – either as the background to their thinking, or explicitly in their models. Both these background assumptions are comprehensively disproved by (among others) the demise of the Soviet Union, Imperial Chemical Industries (sadly), Pan American Airlines, Greece, Lehman Brothers, and many others who were thought too big, too well connected into the business-political network, to fail.

Defeatism of the corporate bosses; lack of experience of business life of the think-tankers

Few if any economists, think-tankers (Anthony Fisher, founder of the IEA excepted), and few of the corporate bosses, have any direct experience of the actual processes of initiating, improving, designing, making and selling products – so their models and mental processes have no place for the way different countries react or not to challenges of all sorts. If they had they wouldn’t pronounce so confidently about the disaster awaiting Britain if its people have the temerity to break away from their defeatist mind-set.

End Notes

[1] Trans. Manchester Statistical Society, 2011-12, pp 49-64.

[2] Source of Survey: British Treasury

[3] Analysis of the long-term economic impact of EU membership and the alternatives.

[4] S F Bush, The Times, 4th November 1992.

[5] Tony Hales and 14 others, Financial Times 5th September 1996.

[6] Reply by S F Bush, Financial Times, 7th September 1996.

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