23 May 2016: HM Treasury analysis: the immediate economic impact of leaving the EU

From HM Treasury Archive, published one month before the EU in/out referendum when Project Fear was working overtime:

A vote to leave would cause a profound economic shock creating instability and uncertainty which would be compounded by the complex and interdependent negotiations that would follow. The central conclusion of the analysis is that the effect of this profound shock would be to push the UK into recession and lead to a sharp rise in unemployment.

Two scenarios have been modelled to provide analysis of the adverse impact on the economy: a ‘shock’ to the economy, and a ‘severe shock’.

In the ‘shock’ scenario, a vote to leave would result in a recession, a spike in inflation and a rise in unemployment. After two years, the analysis shows that GDP would be around 3.6% lower in the shock scenario compared with a vote to remain. In this scenario, the fall in the value of the pound would be around 12%, and unemployment would increase by around 500,000, with all regions experiencing a rise in the number of people out of work.

In the ‘severe shock’ scenario, the rise in uncertainty, the effect on financial conditions and the transition effects are larger. The analysis shows that after two years the level of GDP would be 6% lower, the fall in the value of the pound would be 15% and unemployment would increase by around 800,000.

OK. It's now nearly two years later, so let's mark their 'shock' scenario.

1. Recession? Defined as two consecutive quarters of GDP contraction, nope.

2. Spike in inflation? Over the last ten years, CPI inflation has been as low as 0.2% with occasional peaks of over 4%. It's currently 2.7% or so, pretty much the ten year average. Certainly not a "spike".

3. Rise in unemployment by about 500,000? Unemployment seems to be ever so slightly lower than in June 2016. OK, the unemployment figures are fudged, and there are too many people on crappy 'zero-hours contracts', but it's hard to describe that as a rise in unemployment.

4. GDP around 3.6% lower than it would have been? GDP is now 2.7% higher than it was in Q2 2016. Would it be 6.3% higher if we'd voted Remain? Highly unlikely. Not even the best performing EU economy has grown that much.

5. Fall in value of the pound 12%? GBP = EUR 1.28 in the last couple of months before the referendum. Over the last couple of months, GBP = 1.13. That's down almost exactly 12%. Against USD, GBP fell, but has clawed most of it back again and is down about 5%.

I'll give them half a mark for predicting fall in GBP, although they overestimated it. I think it's fair to give them zero marks for any of the other answers,. Add an extra half mark for neat presentation and that's 1/5.

Their 'severe shock' scenario is a a straight 0/5.
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Can anybody see any reason why we should take their recently leaked doomsday forecasts seriously? The ones predicting that the UK economy would grow 0.5% a year more slowly than otherwise if we do a 'clean brexit'?

HMRC intends to really get tough on 'aggressive' tax avoidance; and in particular with the 'cowboy advisers promoting these high-risk schemes'

and has launched a public consultation on the subject, asking "can we have the unreserved power to 'name and shame' them ?"

One proposal for tackling the behaviour of high-risk promoters is to ‘name and shame’ them. HMRC does not currently have the power to name promoters of avoidance schemes whose behaviour is high-risk; Raising the stakes on tax avoidance consultation looks to give HMRC the power to do so unreservedly.

Naming high-risk promoters will publicly identify them, distinguish them from mainstream tax advisers and make sure that their customers know who they are dealing with.

IMF drops HM Treasury a hint

Playing clever funny money games is ok, up to a point, but watch you don’t find yourself getting stung when the time comes to try and unravel them.