Britain’s last government showed almost “criminal” levels of negligence by failing to create a contingency for the UK voting to leave the European Union, according to a pro-Brexit economist with close ties to Foreign Secretary Boris Johnson.
Gerard Lyons — one of the few prominent economists to back leaving the EU, and a co-founder of the Economists for Brexit group — told an audience at the Brexit & Global Expansion Summit in London on Monday that by failing to prepare plans for what might happen in the event that Britain voted to leave, Prime Minister David Cameron and Chancellor George Osborne left both the new Conservative government and the British people high and dry.
Here’s the key quote from Lyons, who was Johnson’s chief economic advisor for three years when he was Mayor of London:
“The previous government, the chancellor and the prime minister, Osborne and Cameron, basically left this current government in a terrible position, because no work was done. It was almost criminal negligence, the actual fact that Whitehall and Westminster were not left in the situation to be prepared for this.”
Prior to the referendum, the government made it abundantly clear that it was not making plans for the potential impacts of Brexit, with Charles Roxburgh, director general for financial services at the Treasury telling Business Insider in February:
“It’s the government’s policy not to do contingency planning. So we will not be doing contingency planning — that’s consistent with the position we had on Scotland, so that’s the answer to your question.”
Lyons contrasted the previous government’s approach to that of the Bank of England, which prepared substantial contingency plans to deal with any market fallout from the initial shock of the referendum outcome, and then quickly implemented a sweeping programme of new monetary easing, cutting interest rates to a record low of 0.25%, and extending quantitative easing.
“The Bank of England in contrast … was well prepared. People might disagree with the actions they have taken, but they were prepared,” Lyons told the audience.
Lyons assertion came as part of a discussion about the government’s approach to Brexit, and the growing likelihood of a so-called “hard Brexit” — leaving the EU without a trade deal or access to the single market, in return for gaining control on immigration.
He argued that the new government’s perceived approach to Brexit is not only about leaving the EU, but also fundamentally changing the British economy, saying: “Basically its rewarding people who voted for Brexit, its about infrastructure, its about the productivity gap, its about the regional divide, rebalancing the economy — the stuff that was talked about in 2008, but nothing happened. That’s now on the agenda.”
During the same conversation, George Magnus, a senior economic advisor for UBS took a fundamentally different stance, arguing that “the government is clueless. I don’t think there is really a strategy.”