 ac yn ystod gyda'r cyfnod gredig sydd wedi'i argynnu cyfnodol, a'r cyfnodol yn ymgyrchol wedi'u gweithio, a wedi'i gweithio'r cyfnodol, a'r cyfnodol yn ymgyrchol ynglynethau ar yr ysgol, ac mae'r cyfnodol yn ystod cymdeithasol. A'r cyfnodol yn ymgyrchol, a'n mynd ymgyrchol. J Van Denne. Mae Dyblin ac Eirlin yn enw. Mae'n meddwl yr ysgol yn ymgyrchol ychydig ar gyfer y llyfr, Roeddwn i ddechrau mi roedden nhw ar y dda, felly mae'n amser oed ymdarganiad menud gyda'r Unedig. Llyrgrifaf, adegwch am yám erbyn mewn ymlaen, bwrth le conwyd ar yr Unedig Brydwyr ar gyfer yr unrhyw lyfr. a dyna fyddech chi'n dweud a gweithio'r cyffredin iawn a gweithio'r cyffredin iawn yn y cyffredin iawn. Mae'n ddigonio'r ffordd ar gyfer y gweithio, dyna'r gweithio'r gweithio ar gyfer y gweithio, wedi'n gwneud o'r pethau sydd, ond y lawr yn y cael ei gwirio'r gweithio'r gweithio'r gweithio, yma'r gwahanol, ac mae'r oedd gwahanol fel y bwysig, wrth gwrs, mae'r oedd gwahanol yn ymddangos, sydd y cyfnodau yn y llai'r yma yn y llai'r ymddangos. Felly, ydi'r ffordd, mae'n ddiddordeb yn ddiddordeb? Mae'n ddiddordeb yn ddiddordeb, dyma'n ddiddordeb yn ddiddordeb yn y llai'r ymddangos. Ac mae'n ddiddordeb yn ddiddordeb yn ddiddordeb, it does tell you a bit about where we might be going. So voting leave was correlated with lower income, but more strongly than that, lower educational attainment. There was an age gap, older people much more likely to vote leave. There wasn't much in the way of a gender gap. Place did matter, less prosperous areas were more likely to vote leave, even controlling for the demographics and ethnicity mattered a bit. ddydd y rymhau i ei ddweud o unfrwm ar gwrdd, dypa i ni limch hynny o'r rymhau gwlad y widerfynodol yn gael i'w gweithio. A pheth ymrydol ei wneud o'r careturiadau i gael i hynny i meddwl arall y afetio deallu yn gweithio. So a dyma rhywbeth i mi yw mae, that of people who say they support the death penalty, three-quarters of them voted to leave of people who say they oppose the death penalty. Only one in five voted to leave. And this is quite interesting of course, because the death penalty is not an issue in British politics. No one really cares about it that much. But whether or not you say you support the death penalty is a sort of broader signifier of your social attitudes and values. That wider set of social attitudes and values is very strongly correlated with how you voted in the Brexit referendum. The vote genuinely represented a sort of cultural, geographical, and to some extent economic split in the UK. Why does that matter? I think it matters to where we are going, both in terms of Brexit and as a country and a whole, for a number of reasons. The first of all is that values do appear to trump economic interests. Even if the values, obviously... Nothing here is completely exogenous, yn chlasalu llwith Cheese with people's values and their economic situation runs both ways, there are a couple of very good articles by Martin Sandboo and the FT over the last couple of days on this which I would highly recommend to people that are further interested in this difficult set of issues. I think what it does mean is that this Pro Brexit political coalition isn't going to be swayed very much by the fact that banks are saying that they are going to move their head offices to Dublin or Frankfurt. or Frankfurt. That is not going to change the minds of many people who voted to leave. So some, at least of the economic consequences that you see from the other side of the IRC or our partners from the other side of the channel and say, ha, the Brits are now realising just what a stupid idea this was. That isn't going to resonate with that many people who voted leave. It's going to take more than that. And it means that we are largely boxed in at the moment, at least, to some of our key red lines on free movement and sovereignty, or at least that is how it is perceived. So I think that, and I'll try and nuance this a bit later on perhaps in questions, that at the moment the prospect for reversing where we're going, reversing the trajectory that we're on, looks bleak unless we get a severe and widespread economic downturn. So I don't mean just investment decisions being held up or some companies or institutions relocating their head offices, but a more widespread economic downturn in the next 18 months. And at the moment that is not happening. It may happen, but it's not happening yet. So all that, I think, stepping back means that the most likely outcome, not, as I say, I wouldn't bet on my predictions or anyone else's, but the most likely outcome still seems to me that we have some form of hard or possibly chaotic Brexit. I'll say what I mean by those later on. So what can we say about the economics? First of all, very briefly, and this will come as no surprise to an Irish audience, I suspect, although it doesn't always go down that way with some British audiences, that EU membership was good for the UK. We know that. That is pretty solidly established in the economic literature, and you get estimates of an 8% to 10% boost to GDP or GDP per capita or productivity for the standard reasons. But I do think it's important for economists to emphasise that these things are not symmetric and the fact that EU membership was good for the UK by a reasonably, by an amount that we can reasonably quantify does not mean that leaving the UK, the EU will be bad for the UK. It certainly doesn't mean that you can take the quantitative estimates that we have of the impact of joining and translate those into negatives from leaving. And if you look under the skin of some of the econometric estimates that I'll talk about later, that is sort of what they're doing, and therefore in my view they do need to be treated with a grain of salt. And what we can say is that the economic impact so far has been actually quite small, and what economic impact we have seen has come pretty much exclusively through the fall in the exchange rate. So we know the fall in the exchange rate has boosted inflation that's reduced real wages and to some extent real domestic demand. That's all sort of standard macro stuff. But in a sense that doesn't tell you that much about Brexit because the pound goes up and down all the time. It's a large fall in the exchange rate, but it's not an unprecedentedly large fall in the exchange rate, and it might have happened for some other reason anyway. So it doesn't tell you that much, whereas the more Brexit specific impacts that were talked about in the run-up, in particular the impact of uncertainty on business and consumer confidence, and hence on both investment and consumption, those impacts have not yet been visible in the data. So far apart from the exchange rate impacts it's actually quite difficult to see any impact of Brexit. Now that is projected to change. I won't go through any detail, but this is just the IMF projections. But the key point here is that in 2015 we were at sort of the top of the, close to the top of the developed country growth league, and we are projected to fall back quite significantly, much more towards the bottom as the Eurozone does much better and we do significantly worse. But this is still not disaster right. 1.5% roughly growth in 2018 is mediocre, but then the UK economy again is no stranger to mediocre economic performance from time to time. So it would be hard to describe this if this turns out to be the case as the end of the world. Of course these things can change quite quickly, and it seems to me that there is at least some possibility that we will see a very abrupt reversal, that the uncertainty related impacts on business and consumer confidence which some people forecast, the Treasury in particular forecast as it being a direct result of the referendum, will materialise as a result of some breakdown in negotiations or some particular event on the timetable over the next 18 months. But as yet it has not happened. So what, where therefore could we be headed? There is a lot of talk in the UK about hard and soft Brexit and there is also a lot of talk because of the Prime Minister's phrase that no deal is better than a bad deal of what the implications of no deal would be. And I think this does get, does quite confusing. So we have tried, we and my colleagues in the UK and in China in Europe have tried to present a sort of taxonomy of the different types of outcome that might materialise over the next 18 months. And you can quarrel with some of these and there are perhaps some intermediate positions but I think this gives some idea of the possibilities. The first possibility is a chaotic Brexit where we have literally no article 50 deal. And I think we recently produced a publication which is on our website called The Cost of No Deal. And I have to say I went into it thinking when I and my colleague started looking at the different aspects and trying to write it as thinking well it's not, it's clearly going to be bad but it's not going to be disastrous. When people talk about planes stopping flying between Dublin and London or whatever or the electricity being cut off they surely are exaggerating. And I think what we concluded was that while that is, those things are probably, you can probably mitigate those impacts it actually would be pretty disastrous for the UK. Pretty bad for the rest of Europe frankly too but pretty disastrous for the UK. On my own particular area of immigration and free movement one thing which really strikes me which is not highlighted very much in the UK is that the day after on March 30 2019 if there is no article 50 deal the status of EU citizens in the UK will be sort of all right because UK law has incorporated the key provisions of relevant directives and those so UK law states EU citizens have the following rights and that will not change as a result of no deal. Now there will be all sorts of uncertainties and problems I want minimize the difficulties that these people will be in after no deal but there if you think about it that's nothing compared to what will happen to UK citizens on the continent Ireland of course is somewhat different because of the historical legacy but to UK citizens on the continent who are currently again Belgium domestic law says EU citizens have the following rights but on March 30 2019 under no deal UK citizens will not be EU citizens anymore. What will their rights be in Belgium? I genuinely don't know and my lawyer colleagues don't know either and I think that is really really frightening the idea that there are close to a million Brits who on the day after no deal would literally would they be illegal immigrants would they be working illegally technically quite possibly yes that is not something I think any British government should be willing to compliment. Second set of options Cliff Edge Brexit where we do get a deal on the article 50 issues but there's no deal on the future relationship and there is no transitional period so that's where we go straight in that is an orderly Brexit that nothing stops working but we immediately go to a full customs border full tariffs on WTO most favored nation terms and all the rest of it. Again pretty nasty from the point of view of the UK economy and not helpful from the point of view of the rest of Europe. The third which is where the government seems to be headed at the moment is hard what I described as a hard but orderly Brexit that is to say we have an article 50 deal and we have some agreement that at least for a transitional period not too much changes but there is only no or only a limited deal on our future relationship so that in that sense we still end up with a hard Brexit but it we do it in a much more orderly drawn out way that allows us to at least manage and mitigate the economic consequences and then finally you have a the softer version which is not on the agenda for the UK government at the time but then the UK government that we have now may not be here in in three or six or twelve months which is a much softer Brexit where we have an EA or an EA like relationship where we try and negotiate membership in either in the single market and the customs union either permanently or over a very extended transition or implementation period or or limbo period as you might call it but the fundamental problem here of course remains is that we don't know we the UK and indeed you know don't know collectively which sort of Brexit we want we genuinely don't we do not know whether we want a Nigel Farage Brexit a Liam Fox Brexit or a Keir Starmer or Philip Hammond Brexit to you know and what I mean by those is not so much the option to know but you know what's our vision of the UK's place in the world in 10 years the vision of a Farage Brexit is one of us reversing globalization shutting ourselves off to people but also to some extent to to the other aspects of globalization to the extent that we would have a key international relationship it would be be be with the US as a effectively a subsidiary of a Trump a Trump oriented America so that's the sort of Farage vision the Liam Fox vision is much more of a global Britain where we'll be freely trading with the world and we'll leave you parochial insular protectionist Europeans behind as we sail off and make deals with with the US but also with India China and and so on and then there's the the Keir Starmer and Philip Hammond version of Brexit which is basically that to the extent possible we keep things as we are now as they are now while leaving the political structures of the European Union but we recognize that our fundamentally our most important economic and trading relationship by far is with the EU 27 and that our priority must be to to preserve that at the same time is continuing as we always have done to trade with the rest of the world so this is a sort of not a status quo because leaving the EU in political terms means quite a lot obviously it's not the same but it is a lot closer to status quo than either two and frankly the point is that the UK has not made up its mind and you know we haven't had the debate between these versions of Brexit almost certainly there is no majority for any one of those versions of Brexit which obviously is quite a difficult problem in a you know if you're trying to think about how we get from where we are now to settling on one of them since there's no majority for any of them and we don't have clearly identified political parties identified with one or the other it's quite difficult to see how we resolve this particular set of dilemmas on to the economic impacts of these various various possible scenarios just to list the key aspects and I'll talk mostly about trade and migration because those are the ones where most work has been done and where I think which I think matter most and so on trade the key point obviously is that the impacts will depend both on the nature of our future trading relationship with the EU and also on what our trading relations with our countries are and this is something where we have a fair amount of evidence to go on regulation I think we can fairly safely say at the moment there is no great political will in the UK to make major changes to the regulatory environment if anything we are moving somewhat away from the current our current ultra flexible approach to labour market regulation for reasons which don't have that much to do with brexit it perhaps just a natural swing in the pendulum in the way the UK economy has evolved I think there is a degree of consensus that the relatively flexible labour market model that we had in in the early 2000s which worked pretty well then in my view is not working so well now and a bit of extra regulation is called for it won't be a huge change but if it but the the key point here is we're not going to leave and suddenly deregulate the labour market or remove the aspects of labour market regulation we have is not going to happen and similar similar things apply on environmental and other aspects of regulation budget contributions you know again this is macroeconomically not a big deal we will get some benefits from not paying in eventually but not in the short term and immigration what are the impacts of a likely sharp reduction in EU migration to the UK um so this just gives a summary of of of the um the credible estimates that are out there from from people using reasonably well established models um and I think that the I'm not going to describe these in details that I'd make two key points first of all that the the estimates range from down to you know a hit of two percent of GDP up to eight percent of GDP and that's quite a big range and it reflects I think the uncertainties I described before about trying to use historical data to project forward and I think it represents to my mind a sort of reasonable set of plausible bounds I do not see that it's likely that leaving the EU will do as much damage as we gain from joining the EU so I think excessive negative impacts of greater than eight to percent beyond you know outside a total chaos scenario don't seem to be plausible whereas on the other side two percent is is quite small and if you think about these are quite you know this is quite a range this is over 15 years or so so two percent head to GDP is maybe a tenth to percentage point off each year for 15 years well that's not good thing um obviously tenth to percentage point and compound growth rates matter you know um but it's hardly noticeable certainly not from a year to the year basis um at the other end of the spectrum eight percent is is um 0.3 um sorry is about half a percent off the growth rate each year that is quite a big deal and certainly compounded it is a very big deal but again it doesn't mean we're we become a poor country we're still growing on our most reasonable perspectives we're just we just notice our relative standard of living compared to you guys and the rest of Europe falling slightly farther and farther behind each year um so you end up with a the a view that you know leaving the EU will not be economically painless but it won't be economically cataclysmic either it will be something in between the you know sort of unpleasant but not but not too bad through to really rather nasty but not the not the end of the world and I think that to me is a sort of reasonable way of characterizing what the balance of possibilities are at the moment this would however we are talking about quite large impacts on trade so we're talking about reductions in total trade from most estimates of 20 to 30 percent so that is quite a big deal so although we don't use that much in growth we do see out the share of trade in GDP would become a much less open country in trading terms um and crucially I think this is very unlikely be compensated by increases in in third country trade plausible trade deals with again these are methodologically quite difficult and and you can quarrel with them but no one I think suggests that that the impact on total trade of any plausible free trade deals with other countries is going to be anywhere near enough to offset the negative impacts of of leaving the single market finally say a few words about my own recent research on immigration so this is a recent paper I published in the Oxford University of Economic Policy on the determinants of EU migration to the UK and I think two key points here one is that free movement in and of itself really does matter you really do see it in the data whichever way you cut the data free movement really really did lead to a large upsurge in migration from EU countries to the UK and there is every reason to believe that limitation that that major restrictions and or the reversal of free movement will lead to very large falls in immigration and this this assumes still that we retain a more liberal system in some sense than towards the EU than we do towards the rest of the world but that free movement itself ends um and you see quite large falls in net net inflows over the next five years or so and incidentally I should note that these estimates were made towards the end of 2016 based on data available then so far then we have already seen quite a significant fall in inflows broadly consistent with a sort of picture we're trying to paint here so I would argue that the data already supports this idea and this of course is even before free movement ends any changes are made to free movement and law and policy terms this is purely a result of some of the psychological and practical impacts of free movement in terms of what people think their future rights might be in in the UK as well as the broader economic developments in in the rest of the the the eurozone and we also try and this is much more speculative to project that through into what that might do to to to GDP and GDP per capita and again as I say these are highly uncertain sorts of numbers but you get implications for GDP which again are sort of on the unpleasant but not the end of the world end of the spectrum we will be as a result of leaving the EU and reducing migration we will may making ourselves somewhat poorer not disastrously poorer but somewhat poorer exactly how much very much remains to be seen so I'll just conclude on that say that you know I don't think we should assume that Brexit necessarily will be a disaster for the UK either in the short or the long term um but some of the more positive outcomes that you could paint in principle of what Brexit might look like um do seem to me to be quite implausible at least given the current political conjuncture in the UK that may change meanwhile the the short term impacts are almost impossible the forecast and will depend completely on what happens politically over the next year or so and what the the market and economic reaction is to those political events but there are obviously a number of potential tipping points but over the long term I think we can be reasonably clear that the UK is likely to be less open to trade and migration over the medium to long term as a result of Brexit and that will make us somewhat worse off that is that is a consequence of the decision we have taken we still have the power to to influence very much exactly how large those effects are and and and we will see we will get a much better idea over the 18 months over which of these possible trajectories that I've outlined we're going down