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Brexit uncertainty

The economic impact of Britain’s exit from the European Union is fuzzy because economic modelling can’t accurately predict unique events, Michael Kitson of Cambridge Judge tells an audience at St Catharine’s College.

The future economic impact of Britain’s decision to leave the European Union is very uncertain due in part to the difficulty of modelling the uncertainty of unique events, Michael Kitson, University Senior Lecturer in International Macroeconomics at Cambridge Judge Business School, told an audience at St Catharine’s College, University of Cambridge.

While consumer spending has so far proved more resilient than many expected, Michael said that the longer-term picture is fuzzy because models can’t accurately reflect such factors as the time and resources required to negotiate new trade deals, the impact of reduced immigration on innovation, and changes to corporate strategy including the level of foreign direct investment into the UK.

Michael Kitson

Michael Kitson

The June 2016 vote reflected fractures in British society, as shown by the greater proportion of Leave votes among less-educated, less-wealthy and older voters, he said, although many of those who supported Brexit may end up worse off if Brexit does result in slower economic growth.

While both Leave and Remain voters lacked trust in some groups – including UK and non-UK politicians, and journalists – Leave voters overall (polled on the day of the Brexit referendum) said they lacked trust in every group or entity they were asked about, including the Bank of England, economists, business people, and charity leaders.

The talk by Michael, entitled “The Political Economy of Brexit,” was held at St Catharine’s on Wednesday 8 November as part of series supported by the Cambridge Political Economy Society and the Economics & Policy Group at Cambridge Judge Business School.