Leave the EU? Osborne calculates that would lead to Armageddon

George Osborne and cabinet ministers EU

The cabinet ministers clung on to their lecterns for dear life as Osborne said Britain would be doomed outside Europe.
Photograph: Matt Cardy/AFP/Getty Images

“In a li’l while…” opened George Osborne chattily. The threat of Brexit was now so great that the word little had already been robbed of two Ts and an E; come June there could be nothing left of it. Alongside the chancellor stood cabinet ministers Liz Truss, Amber Rudd and Stephen Crabb hanging on to their lecterns for dear life, trying to look as if they knew why George had insisted they join him at a research centre for the production of lightweight materials on the outside of Bristol on a Monday morning. The clue was in the flimsy materials, but their faces remained blank. One potato, two potato, three potato …

In a li’l while we would all be doomed. Britain was on the verge of Armageddon. George didn’t want to frighten the country, he wanted to terrify it. If we voted to leave the EU a terrible pestilence would be visited upon us. Britain would be cast into an economic wilderness so bleak that few – if any – would survive. This was Project Fact Plus. For the last couple of hours or so, the finest minds in the Treasury had been doing their homework and he, George, had come to present their findings.

“Every household will be £4,300 worse off by 2030,” said George. “And that’s the best case scenario.” Never mind that a Treasury forecast is usually found to be hopelessly inaccurate within three months, this one could be guaranteed to be spot on. The chancellor hastily pointed to the equation In(IFDIijt) = αij1In(Yjt) + α2In(Yjt) + α3In(DISTij) + α4POPit + α5POPij6COMLANGij + α7COLONYij + α8BORDERij + α9EMU2ijt + α10EMU1ijt + εijt = αij + αXijt + εijt which could be found in the appendix to his speech on page 171. “If you assume that EMU2 is a dummy variable which equals 1 if both the origin and destination countries are members of the euro area at time T and zero otherwise, that is,” he added helpfully.

Truss looked desperate, having always assumed that Boris was the dummy variable. Rudd nodded her head sagely. She had done the sums herself and concluded much the same thing. Anxious to make a good impression on his first big day out with the chancellor, Crabb took out his pen and made a quick calculation. “I think you’ll find the actual figure is £4,328.03,” he interrupted. George looked irritated. “You’ve forgotten that αij is the country-pair fixed effect,” he snapped. “That completely alters the Rutland coefficient.” Crabb crossed out his crossings out and started again. “Damn,” he muttered. “I had forgotten Rutland. Let me see … yes, you’re right. It is £4,300 per household precisely.”

Having laid out the economic case for why Brexit = frogs2 + diseased livestock3 (15 diseased livestock = one Chris Grayling) + locusts4 + 4(lice5 + boils6)9 = £36bn down the Swanee, George handed over to his expert on Norway. There was an embarrassed pause before Truss realised she was the Norwegian expert. “Norway – is – not – um –um –in –the –um – um – EU,” she said slowly. Listening to her talk is like eavesdropping on a remedial reading lesson.

This turned out to be about the limits of Truss’s Nordic knowledge, so George handed over to Crabb to give the World Trade Organisation perspective. “Very bad,” he said, “Very, very bad.” George, Truss and Rudd nodded in unison. “The clocks are ticking.” Not that you could hear them above the low thrum of machinery. Rudd drew the short straw of explaining why the Canadian option was just as bad for the UK. “Canada is Canada,” she said. “And we are not Canada.”

George was far from finished. Unlike the Vote Leave campaign, who were content to indulge in fantasy economics, his forecasts were 100% accurate because they followed the gravity model pioneered by Head and Mayer in 2013. “To reiterate,” he said. “In(Tijt) = αij + γt + α1In(Yit * Yjt) + α2In(POPit * POPjt) + εijt = αij + γt + aXijt + εijt = We’re all completely screwed and income tax will go up by 8p in the pound.”

With the case so unequivocally made, George was willing to take a few questions. Were there really no economic benefits attached to leaving the EU. “Absolutely none at all,” he replied confidently. “Everyone will die of starvation by 2045. Would you like to add something on this, Liz?” There was nothing Liz wanted to do less, but she wasn’t in a position to say no. “I have two daughters and I want them to stay in the EU,” she offered hopefully. Thanks Liz.

George took over again, keen to get the last word. Were those Vote Leave Conservatives who disagreed with his analysis completely economically illiterate? “Absolutely,” he said. “Gove + Boris + Duncan Smith + Leadsom = A plague of half-wits.” The ancient Egyptians could count themselves lucky to have avoided that one.

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