Lord Jim O’Neill, the former head of global economics research at Goldman Sachs and minister in the UK’s government, has said he is “embarrassed” by the predictions he made about the economic consequences of the UK leaving the European Union.
Lord O’Neill advocated a remain vote before the referendum.
In March 2017 he called for a "fresh debate" in parliament on the issue and said many people "hadn't thought" about the dire consequences of leaving the EU.
Even in an interview in December 2017 he branded Brexit "really bad news" for the UK economy.
But speaking to the BBC yesterday (22 January) he said the UK economy was likely to be saved by the very strong performance of the global economy this year.
This, he forecast, will mean UK economic growth forecasts are likely to be revised upwards in 2018.
He said the negative impact on the UK economy of leaving the EU will be dwarfed by the boost to economic growth from China and Europe.
The former politician said he has not changed his mind on Brexit, and that the economy would be doing even better if the country wasn’t leaving the European Union and also getting the benefit of global growth.
He said: “"I certainly wouldn't have thought the UK economy would be as robust as it currently seems, That is because some parts of the country, led by the North West [of England], are actually doing way better than people seem to realise or appreciate.
"As well as this crucial fact, the rest of the world is also doing way better than many people would have thought a year ago, so it makes it easier for the UK."
He cited research, carried about by the Cambridge Econometrics and commissioned by the Mayor of London, Sadiq Khan, said that UK GDP would be 3 per cent less between now and 2030, if the UK leaves the EU but a deal is agreed between the EU and UK.
Lord O’Neill said: “If that is the worst Brexit can do, I wouldn’t worry about it.
"If it is only 3 per cent, what's going on with the rest of the world - helping us - and with productivity improving, that will easily dwarf a 3 per cent hit over 13 years, easily.”
The economist said that in the event of a “hard Brexit or a no deal Brexit” he would expect the impact on the UK economy to be much more severe than 3 per cent over 13 years.
He said: “I share the views of many that Brexit is a really weird thing for the UK to impose on itself from an economic perspective.
"And maybe this [better global growth] means the country's going to be able to cope with Brexit better than certainly somebody like me might have thought some time ago.
"But I would quickly add at the same time, I have felt for a good couple of years, as important as Brexit is, it isn't the most important thing facing Britain's future."
He said the imbalance in the economy, with so much wealth concentrated in London, and improving levels of productivity are more important than Brexit.
Lord O’Neill served as commercial secretary to the Treasury in the UK government between 2015 and 2016, with his main role being to develop the “Northern Powerhouse” project.
He first came to public notice when as a Goldman Sachs employee he coined the phrase “BRICS” in 2001 to describe the emerging market countries of Brazil, Russia, India, China and South Africa.
David Jane, who runs multi-asset portfolios at Miton, said he doesn’t think Brexit will be a major determiner of investment returns in the years ahead, with technological change and ageing populations much more important.
Philip Milton, who runs Philip J Milton and Co, an intermediary firm in Devon, said he thinks the long-term impact of Brexit on the UK economy will be positive.
David.Thorpe@ft.com
