65th Economic Policy Panel

For more than 30 years, Economic Policy has been publishing papers on pressing European policy issues. Preliminary versions of the papers are first discussed at Panel meetings. The 65th Panel meeting, which starts today in Valletta, features papers on the causes of Brexit, on the consequences of Brexit, on the impact of the 2015 reforms on the Italian labour market, on innovation, on entrepreneurship, on retirement, on monetary policy, and on mobile communications. The papers are available here.


A colleague has pointed out this Economist piece on gambling to me. Check out the figures on average annual gambling losses per resident adult, and where Ireland comes in the list: am I the only one who thinks these numbers are enormous? Or that we should perhaps be worried about them — especially the very large online component?

(This also gives me an excuse to complain about the FAI’s League of Ireland streaming deal with an online gambling company.)

Does trade policy only have a small impact on trade flows? Interwar evidence

I have been working for a number of years on interwar trade policy, trying to see if using more fine-grained data will alter the consensus view that 1930s protectionism didn’t matter much for trade flows, in the context of everything else that was going on at the time. It is time-consuming work, but we are beginning to produce some results now, the first of which are previewed here. And I suppose that one upside of the time it has taken us to put the dataset together is that, in the meantime, Brexit intervened, which will hopefully increase interest in quantitative studies of trade policy!

We have to prepare for the worst

Colm is in good form in the Independent today. I had exactly the same response to the BBC programme on Brexit as he did.

There are at least three reasons why I think an “off the cliff” Brexit is the most likely outcome.

First, and most importantly, an “off the cliff” Brexit is what the hard Brexiteers want: a break with the EU that is as clean and as unambiguous as possible. And they are currently driving the show. Arguments about economic interest have no impact on this group: for them, it is all about sovereignty, as they see it.

Second, the key Brexit ministers are clearly not on top of their brief. They assure us that jumping off the cliff will be fine, and then it emerges that they haven’t studied what its consequences would be: it is surreal stuff. Check out this clip of Brexit minister Davis, if you haven’t already, and remember: this is the man tasked with negotiating Brexit.

Third, while UK civil servants are very competent, there are only so many of them. If all off the shelf transitional arrangements are ruled out on theological grounds (having to do for example with the ECJ) then it is hard to see how bespoke arrangements can be sorted out within two years, even if ministers understand what needs to be done, and even if they want to do it.

Hopefully I will be proved wrong, but we have to assume the worst and prepare for it. That means not putting all our intellectual, political and administrative energy into fighting amongst ourselves as to what the best deal should be: there may not be one at all, simply because the UK doesn’t want one or isn’t capable of delivering it. It means thinking about the people who will be hurt — people working in small businesses exporting to the UK, primarily, but also people living in border regions — and about how the State and the EU can help them to adjust.* It means targeting every British food processing firm that may find itself at a competitive disadvantage in the EU post-2019 and seeing if they can be induced to invest in Ireland (outside Dublin, which is where we will need the jobs). It means becoming more granular: listening more to the industries involved, and solving specific problems one at a time. It means the rest of us abandoning the “I’m alright Jack” mentality that often pervades Irish discourse, and all of us realising that we really are in this together.

*And, even though I guess it is special pleading, spare a thought for cross-border workers. The pre-1973 CTA won’t be enough, I imagine, to replicate current arrangement.


Update: Wolfgang Münchau takes the polar opposite view, here. Hopefully he is correct!