Leading UK economist David Miles gave his take on the economic impact of coronavirus (COVID-19) and Brexit at a virtual event for Business School alumni
Professor David Miles, Professor of Financial Economics at Imperial College Business School, explored the different effects of COVID-19 and Brexit on the UK economy at the event entitled “COVID-19 and Brexit – the journey through troubled waters”.
Professor Miles, who was a member of the Bank of England’s Monetary Policy Committee for six years from 2009 in the aftermath of the financial crash, gave a talk and was interviewed by Professor Nelson Phillips in front of Imperial College Business School alumni based across the globe.
At the event Professor Miles compared COVID-19, which the UK “has in common with pretty much every country in the world” and “the more parochial and specific” Brexit phenomenon.
Brexit is a significantly less important economic, social and political event than the virus
Professor Miles argued that the economic impact of COVID-19 – at least in the near-term – was likely to be much greater than that of Brexit, which he said was less predictable.
“Some people see potential upsides of Brexit, but I don’t think anybody in their right mind sees any particular upsides to COVID-19,” he said.
“Brexit is somewhat ambiguous and somewhat negative, but in terms of magnitude it is a significantly less important economic, social and political event than the virus.”
Widespread costs of lockdown
Professor Miles also said the reaction from the UK government to the pandemic had been “enormous”, noting the economic lockdown and the furlough scheme, adding that despite this effort, the response had not been particularly successful.
Professor Miles recently wrote a paper, warning of the “widespread costs of lockdown”. Published in the National Institute Economic Review, the paper suggests that the losses from continuing severe restrictions in the UK are large relative to the likely gains.
It’s human welfare on both sides of this balance sheet
“It’s not as crude and simple as lives on the one hand and money on the other, it’s human welfare on both sides of this balance sheet,” he said at the event.
Professor Miles argued the different kinds of costs associated with coronavirus, such as a significant rise in unemployment, and Brexit, such as new barriers to trading goods and services, were so different that there was not a lot of interaction between them.
“These are additive factors and unlikely to interact with each other.”