Rebuttal: Economists and Sophisters

uk finance

Studies which claim to show that the UK has underperformed in service exports since Brexit don’t match the economic data.

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A number of papers have picked up on research done by pro-Remain academics at Aston University (connected with work done at the Center for European Reform) which claims that UK service output has shrunk UK service exports by £110 billion between 2016 and 2019, compared to if the UK had never voted to leave.

This hypothetical calculation, positing such a vast decrease, bears little resemblance to the actual economic numbers.  Indeed, if plotted on a graph, the value of UK service exports 2016-2019 was slightly above the trend growth line until COVID:

Economists and Sophisters

UK service exports increased in terms of volume as well as mere value between 2016 and 2019 – and indeed grew faster than those of the US.  One may compare also the data adduced by the economist Julian Jessop, which show similar trends in the value of service exports in France and Germany.  Indeed, in the FT’s coverage, though the Aston report’s authors ascribe high Irish service export growth to the effects of Brexit, Irish analysts disagree, pointing instead to the country’s links with tech firms.

The problem with the kind of counterfactuals that studies like the Aston University one employ, as we’ve discussed before, is that they’re based on highly speculative models of how countries ought to have performed based on the observed performance of other countries (see an earlier Center for European Reform paper for details).  Though the authors of reports like this try to control for such factors, they are ultimately speculative: they make good headlines, but offer little by way of certainty.  Particularly if the assumptions of those making them direct the models, the outcomes are all to easy to dictate in advance.

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Briefings For Britain