False claims, forecasts, and the EU Referendum
2nd Dec 2016
Campaigners on both sides of the EU referendum made false claims.
That’s correct. Sometimes they even made false claims about the false claims made by each other.
Remain campaigners predicted that house prices would fall by 10% after a vote to leave.
Not quite. The UK Treasury expected house prices to be 10-18% lower than they would otherwise have been in 2017/18.
We were promised a ‘punishment budget’ before the referendum.
Sort of. Remain campaigners published a 7-page ‘Brexit Budget’ which gave rough, hypothetical figures for the kind of cuts that would be needed if the UK voted to leave the EU, the pre-referendum economic forecasts were correct and the government still wanted to run a balanced budget in 2020/21. It was presented by George Osborne, then Chancellor of the Exchequer.
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“We talk about honesty in the campaigns, both sides were equally guilty. I am still waiting for my house price to fall by 10%... It was supposed to happen the day after we leave the EU, we were promised a punishment budget.”
BBC Question Time audience member, 1 December 2016
That said, the Treasury didn’t predict that house prices would fall by 10%, immediately after the UK voted to leave the EU.
The Treasury did say something that sounded similar. It expected house prices to be 10-18% lower than it would have otherwise expected at the end of 2017/18.
That wasn’t a 10-18% fall from what they were on June 23rd 2016, it was a 10-18% fall compared to what they would have been, in the parrallel universe where the UK voted to remain in the EU.
It’s also important to spell out the difference between the debate about the short term economic consequences of voting to leave the EU, which created lots of uncertainties, and the long term economic effects of actually leaving the EU and trading under different rules.
Just because the Treasury’s expectations about the immediate impact of a vote to leave were wrong, doesn’t necessarily mean that its long term expectations about different trading arrangements are automatically wrong.
But economic forecasts should always be taken with a pinch of salt.
And there’ll always be a debate about just how ‘right’ or ‘wrong’ the pre-referendum forecasts turn out to be. We’ll never know exactly what would have happened if the referendum result had gone the other way.
The Treasury based its expectations on some key things that didn’t happen. Among other things, it appeared to assume the government would trigger Article 50 straight away, as David Cameron had indicated, and that the Bank of England would keep interest rates the same, which it didn’t.
It’s a similar story with the ‘Brexit budget’ presented by George Osborne, then Chancellor of the Exchequer, and Alistair Darling, a former Chancellor, which the audience member on BBC Question Time referred to as the ‘punishment budget’.
That was a 7-page pamphlet which republished some of the economic forecasts and gave rough, hypothetical figures for the kinds of cuts which a future government could make—assuming it still wanted to run a balanced budget in 2020/21.
People will disagree on whether that was a believable assumption at the time. The government hasn’t stuck to its aim for a balanced budget, and now plans to run a deficit in 2020/21.
This fact check is part of a roundup of BBC Question Time. Read the roundup.