Nobel Prize economists have their say on UK’S split with EU

THE world’s Nobel economists have expressed a range of opinions on the UK economy and Brexit during their gathering in Lindau this week.

Sir James Mirrlees, a no-nonsense Scot who won the Nobel Prize for work on optimal taxation and incentives, has argued that Britain could pay a painful price for Brexit but he cautions against alarmist claims based on thin information – especially from those with a vested interest in the “ancien régime”.

“There will be winners and losers. People on low wages may well gain from leaving the single market if other forms of free trade are negotiated,” he said. Sir James also had consoling words on the plummeting pound.

“Tourists going abroad are likely to feel very cross. But we had an effective devaluation like this after Britain left the Exchange Rate Mechanism in 1992, and it is hard to see that there was much disadvantage in what happened. I don’t see why the effects should be any bigger this time,” he said.

Sir Chris Pissarides, from the London School of Economics, meanwhile said it will take until the mid-2020s before we can measure the impact of Brexit, although the precipitous fall in sterling to 1.0850 against the euro this

‘There will be winners and losers. People on low wages may well gain if other forms of free-trade are negotiated’

week is already discounting trouble – even if this is not yet “disorderly” in economic parlance.

“I have always feared that the pound would depreciate but what really matters beyond exit is the agreement we sign. Free trade access to the single market looks very unlikely. The big risk is that we don’t even get partial entry like Norway or Switzerland, and then things will get progressively worse,” said Prof Pissarides, who won the Nobel Prize in 2010 for work on unemployment.

But he remains optimistic that Britain will muddle through. However, not everyone was as convinced.

“Brexit is England’s biggest policy blunder since George III fumbled away the American colonies,” said Daniel Mcfadden, speaking at the triennial Nobel forum on Lake Constance.

“The true costs of Brexit have yet to be seen. We’re only just starting to see an exodus from the City. The financial industry is diversifying and some of it is not going to come back,” he told The Daily Telegraph.

Prof Mcfadden, a Berkeley economist who won the Nobel Prize in 2000 for his work on complex social systems, said it was jejune to draw conclusions from the resilience of the British economy seen so far as the lag times on investment are extremely long.