Journal Article

The Brexit vote, economics, and economic policy

Date: 10 March 2017
Authors:
Publisher: Oxford University Press
Published in: Oxford Review of Economic Policy
JEL classification: E650, F150
DOI: 10.1093/oxrep/grx017

Economics was front and centre during the run-up to the June 2016 referendum on the UK’s membership of the European Union and economists were almost unanimous that leaving would make the UK economically worse off than otherwise. Still, in the 6 months since the referendum, there has been little discernible impact on macroeconomic variables beyond a fall in the value of the pound, and the economics profession has been criticized for being overly gloomy in its predictions. This article offers some immediate reflections on the state of the economy in the run-up to the vote, on the forecasts of economists during the campaign, and on the changes to policy since. The lack of an immediate recession has been taken as evidence that the economics was wrong, but it is not evidence that leaving the EU will be economically harmless. Despite fiscal and monetary loosening most forecasters still expect growth to be slower than otherwise over the medium term. The vote and debate around it does offer some challenges for economics and we conclude with five lessons for the profession.