#Brexit Is A Disaster, But @DavidDavisMP Is Right About The 57 Documents

Attacking SecState DEXEU by using an easily foiled challenge does not aid the cause of those seeking soft or no Brexit. I will outline why the HMG position on the 57 documents is coherent and plausible, contrary to widespread opinion

Everyone seems to be struggling with the government’s stated position on these documents, claiming that there have been obvious inconsistencies.  I will argue that on this sole point, there have been no inconsistencies and in fact, the position of HMG is economically correct.

By “everyone,” I mean the Financial Times and noted QCs as well as the entire Twitter commentariat.  So that really is everyone.

The general position seems to be something approximating to the following. “Davis said HMG had done a lot of work (“57 documents”) on the economic impact of Brexit but then when he was asked to provide it, changed his position to the diametrically opposed one of “there are no documents.” ”  If he had said that, he would clearly be inconsistent and incompetent.  But, he did not say that.

The key to this is understanding the formal definition of an Impact Assessment.  According to Davis (and which I accept):

An Impact Assessment must include a “quantitative forecast of economic outcome”

This means that for an Impact Assessment to have been produced, a team of economists and sector experts has produced a complicated spreadsheet modelling cashflows.  Efforts have been made to see what the effect of tariffs on a particular sector would be.  Finally, and critically, assumptions have been made as to exactly what percentage of trade will be lost, to what extent this will be offset by other factors, and what the levels of various key parameters will be, such as GDP growth in the UK and the EU, CPI in various locations, and the level of employment and the flexibility of workers.  If a document does not have such a “quantitative forecast of economic outcome,” it is not an Impact Assessment.

brown and black crater
Photo by Pixabay on Pexels.com

Davis admits that no Impact Assessments have been made.  There has been, though, a great deal of assessment of the economic impact of Brexit.  These are the 57 documents.  Note also that these documents can have detailed numerical underpinning but still not meet the formal definition of being an Impact Assessment.  Just because something considers the impact of Brexit economically does not make it an Impact Assessment.  We see this when Davis says that the fact that a document contains the word impact is not sufficient to make it an Impact Assessment.

Should HMG do Impact Assessments?  No.  They are, again as Davis says, of limited value.  This is because we have little idea of what CPI or GDP are next year, and we have absolutely no idea over the 30 year horizon of relevance here.   I discuss such difficulties of forecasting in a precise way in my new book (see for example pp. 79-80):

https://timlshort.com/the-psychology-of-successful-trading-behavioural-strategies-for-profitability/

So, it is now clear that there is no inconsistency in the position taken by SecState DEXEU and it is in fact economically appropriate.

See Also:

Jacob Rees Mogg Is Wrong To Say That Loss of Passporting Will Not Be A Problem For The City

The Psychology of Successful Trading: see clip below of me explaining my new book!

Where To Cut UK Government Spending: An Alternative Approach

UK Government Spending: Where It Needs To Be Cut And Why

 

Author: Tim Short

I am a former investment banking and securitisation specialist, having spent nearly a decade on the trading floor of several international investment banks. Throughout my career, I worked closely with syndicate/traders in order to establish the types of paper which would trade well and gained significant and broad experience in financial markets. Many people have trading experience similar to the above. What marks me out is what I did next. I decided to pursue my interest in philosophy at Doctoral level, specialising in the psychology of how we predict and explain the behaviour of others, and in particular, the errors or biases we are prone to in that process. I have used my experience to write The Psychology of Successful Trading. In this book, I combine the above experience and knowledge to show how biases can lead to inaccurate predictions of the behaviour of other market participants, and how remedying those biases can lead to better predictions and major profits. Learn more on the About Me page.

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