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Did George Osborne overstate his Brexit warnings?

George Osborne spoke publicly for the first time since the EU referendum on Monday morning. Credit: Pool

The Chancellor spent the campaign leading up to the referendum warning about the economic consequences of a vote to Leave.

Put crudely: the consequences of Brexit will be a recession, job losses, fall in house prices and squeeze in living standards.

He was accused of being the architect of Project Fear but Osborne evidently stands by his analysis "this will have an impact on the economy and the public finances".

Osborne says he spent the weekend talking to central bank governors, business leaders and fellow finance ministers.

Friday saw the biggest daily slump in the value of the pound in history, and this morning the Chancellor tried to calm anxieties by highlighting the strength of our economy, the resilience of our banks and the coherence of his contingency plans.

"We were prepared for the unexpected, we are equipped for whatever happens next", he said. Did it work?

One hour later the FTSE 100 in London opened down 0.8%, FTSE 250 down 1.2%. Nothing to see here, in the context of Friday the sell-off was modest and orderly. The pound fell overnight again against the dollar. Not positive but hardly a disaster.

Everyone understands the fact that Britain will leave the EU but no-one knows what that means. There is a need for strong leadership and a coherent plan. Until one emerges the markets will remain unstable.

There will almost certainly be secondary shocks and some scary moments over the next few weeks. The important thing is where prices settle and we probably won't know that for some time.

The Chancellor didn't resign, surely no surprise. It would have been an odd thing to do in a speech about the need for calm.

There's also no sign of his emergency budget. Days before the referendum Osborne warned Brexit would trigger an economic shock so immense it would demand an immediate response from government.

He estimated (based on IFS forecasts) that leaving the EU would leave the government £30 billion worse off; a financial hole that would need plugging with tax rises and/or spending cuts.

The sense of urgency has apparently evaporated, this is now a decision that can wait until the Autumn and will be taken - presumably by his successor - following an assessment by the OBR.

A perfectly reasonable position to take but not the position he took before the referendum. It rather begs the question: did the Chancellor overstate the economic warnings?

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