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In assessing the doom-mongering of Project Fear, we need to allow for the complication that the forecast of 3.6 and 6.0 per cent falls in GDP were “relative to what would otherwise have occurred”. Helpfully, we have official forecasts made in spring 2016 (by the Office for Budget Responsibility) of the quarterly profile for GDP from mid-2016 to mid-2018 on a no-change, continued-EU-membership basis. They were for GDP to rise by 0.6 per cent and 0.7 per cent in the last two quarters of 2016, by 0.6 per cent in the first quarter of 2017, by 0.3 per cent in each of the next three quarters, and by 0.4 per cent a quarter throughoout 2018. If the Treasury and Project Fear were right in general terms, and we apply an average of its 3.6 and 6.0 per cent Brexit shock effects, we would need to scale down the no-change numbers by 0.6 per cent per quarter (that is, cumulatively in eight quarters by 4.8 per cent, which is of course in the middle of the 3.6 and 6.0 numbers). 

Let us make a comparison between the Osborne/Treasury view (“the Project Fear assessment”) and the outturn. Even provisional numbers are not yet available for the first two quarters of 2018, but again we have a recent official forecast of the
quarterly profile from the OBR. (Both quarters are to see GDP rises of 0.4 per cent.) The box below gives the outcome of the exercise.

It turns out that Project Fear was wrong by almost 5 per cent of GDP. The consequences of this giant error for the rest of the Osborne/Treasury prognosis have been drastic. Instead of employment falling by hundreds of thousands, it has risen by hundreds of thousands. Instead of house prices going down, they have gone up. Instead of the public finances lurching more heavily into deficit, they have been better than at any time since the Great Recession, making the prospect of an eventual surplus far from silly. Above all, Osborne’s scary rhetoric about a return of the Great Recession now looks preposterous. Despite all his supposed capability, he could not have been more wrong. Further, the grotesque misjudgment was not about something distant from his department’s area of responsibility. This was a subject where Osborne had direct ministerial accountability and which was perhaps the defining public-policy issue of his career.

The failure of Project Fear raises wider constitutional questions, particularly about the role of the Civil Service in modern government. In 2013 Anthony King and Trevor Crewe wrote a book, The Blunders of our Governments, which surveyed a list of cock-ups of various kinds from the poll tax to the Millennium Dome. The list included mistakes in economic policy, notably the Treasury’s complicity in the fiasco of UK membership of the European exchange rate mechanism in the early 1990s. Was Project Fear yet another cock-up? One interpretation is that civil servants operated so closely to politicians that they lost their objectivity and saw themselves as serving those politicians. This should not have happened. An obvious risk is that serving one particular set of politicians slides into favouring one or another political party. The constitutional position is that the UK Civil Service is not political and answers to the Crown, understood as “the Queen in Parliament”, where it is made effective by parliamentary questions, select committees and the like. If the Civil Service has been politicised and corrupted, Project Fear could be regarded as uninteresting. On this view it was never to be seen as high-quality, seriously-intended analysis. Rather it was the result of the hijack of the Treasury’s resources by an unscrupulous Chancellor of the Exchequer.
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