Ben speed running ideological derangement in real time. Thing of wonder.
OK let’s have a look at three ways this chart is trying to hide Brexit damage by manipulation.
First, if you take 2016 as your start year at 100 you start the clock at the shock itself, thereby obscuring the pre-existing trajectory. That’s how you hide the fact that business investment was growing at ~6%/yr before the vote and then stalled. It’s essential to the pro-Brexit argument to hide or deny strong pre-2016 growth.
Second, a favourite of those trying to hide Brexit damage is to pick weak comparators that the 🇬🇧 was traditionally stronger than. That’s why they are so keen to show🇫🇷🇩🇪, the latter with its specific energy and industrial shock. They never want to show you 🇬🇧 economy against trade and services-driven economies like 🇳🇱🇸🇪🇩🇰 which are better comparators in some ways. Against a proper 33-country synthetic control group 🇬🇧 business investment is 12-18% below where it would have been had we remained by 2025. The result is 🇬🇧 now has the lowest investment share of any G7 economy at 17.9% of GDP.
Third, the metric used here is another way to obscure Brexit damage. Gross Fixed Capital Formation combines business investment and government capital spending, which flattens and hides the private sector signal. A government infrastructure can lift the aggregate while business investment which is what actually reflects private sector confidence stays feeble. That’s exactly what happened in 🇬🇧: a study by economists at Stanford University, the Bank of England and the National Institute of Economic and Social Research found that by 2024, business investment in other advanced economies was up around 25% on 2016 levels. In 🇬🇧 it had risen by just 4%.