Saturday, 27 February 2016

Why would a Brexit be a "shock" to the global economy?

The BBC has reported that the G20 group of governments thinks that a Brexit would "shock" to the global economy.

UK Chancellor George Obsorne reportedly said:
"The financial leaders of the world's biggest countries have given their unanimous verdict and they say that a British exit from the EU would be a shock to the world economy - and if it's a shock to the world economy imagine what it would do to Britain."
It turns out that the BBC has spun the story to favour UKGov.

In fact, other sources report a more-likely-accurate story in which UKGov wanted the G20 to express an opinion on a Brexit (articles from Bloomberg, FT, Fortune, Reuters).  On the first draft of a G20 press release/communique, the G20 allegedly had made no such comment.

I'll guess that the G20 can't see the relevant of Brexit to the G20, because UKGov's membership of the European Union has zero bearing on UKGov's membership of the G20.  On balance, it seems to me that the G20 has as much bearing on UKGov policy as the European Union does, except that membership of the European Union deprives UKGov of useful and competent policy choices when adapting to changing world circumstances (because, when in the EU, UKGov has to toe the EU's line: let's sink in solidarity, and all that).

That UKGov saw fit to hijack the G20's draft communiqué to whitter on about something irrelevant to the G20 is quite embarrassing.

The BBC did its best to underplay the main story, which is one of attempted deceit/whitewashing, reporting obliquely that:
Asked if he [Chancellor Osborne] or his officials had asked for the warning [the "shock"] to be included in the statement, the chancellor said: "We've got countries around the table like the United States of America, like the IMF, like the Chinese who frankly don't do what anyone tells them to do... "
Exactly.  So why should we want to be different to the USA or China?  Why should we willingly deprive ourselves of opportunities arising from the outside world, or sabotage our own defence against threats arising from the outside world?  Clumping together with the EU like scared sheep is a dangerous choice and a disingenuous, counter-productive defence: when the EU gets it wrong, the UK has no residual policy defence.

As for the ridiculous non-claim that a Brexit would be a "shock", so what?  Nationalising corrupt banks was more of a shock, one which taxpayers in the Western world shall be re-paying for generations to come.  Allowing monetary authorities to maintain 0% interest rates, protected from democratic scrutiny and accountability was initially a shock, to which governments have become addicted (largely because it helpfully launders resources from poor savers to rich borrowers).

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