It will be a slog but Britain will get through Brexit, says top economist

James Sproule, chief economist at the Institute of Directors
James Sproule, chief economist at the Institute of Directors
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Britain will get through Brexit but it will be a slog, according to one of Britain’s leading economists.

James Sproule, the chief economist and director of policy at the Institute of Directors, warned that we must not overlook factors other than Brexit that will affect the global economy, such as the threat of interest rate rises.

Mr Sproule also argued that Britain might have voted to stay in the European Union, if EU leaders had shown greater flexibility in their negotiations with the former Prime Minister David Cameron over changes to Britain’s EU membership.

Mr Sproule told an IoD event in the Queens Hotel, Leeds: “Brexit is at the top of everybody’s list..Brexit is extraordinarily important - but it’s not the only thing out there.”

Mr Sproule said we must look at other big economic issues, such as the fact that fiscal limits have been reached by governments around the world, including governments in Europe.

Mr Sproule also cautioned that some European banks were “stuffed to the gills” full of government debt.

He added: “I think Brexit is just, if you excuse the military phraseology, a slog.

“Brexit we will get through, it’s a slog. Getting a trade agreement is just hard work; hard work for a lot of people for a long time.”

Mr Sproule stressed that there were factors other than Brexit that could provide economic surprises.

He added: “Monetary policy is right now, absolutely catastrophic, in my view, around the world.

“Interest rates could easily start to go up, and people, because they have been lulled into a false sense of security over a long period of time with very low interest rates, they are going to be in a really bad place.

“The Bank of England has told us repeatedly: “Don’t worry, we have lots of other things we can do.’

And I think, ‘Really?’

“Because I’m worried. I’m worried that your credibility when things go sour is so shot to pieces when, what you think is lots of ammunition, turns out to be more or less useless.”

However, he said Brexit could provide an entrepreneurial opportunity, for those willing to grasp the challenge.

He said some observers, like European Council President Donald Tusk, still seemed to be having problems coming to terms with the fact that Britain was committed to Brexit.

“He (Donald Tusk) is saying, ‘I’m going to make Brexit so difficult for you, you’re going to decide, it’s too hard, and we’re not going to do it.’

“I think he’s in denial. It could well be that the British get to acceptance (about Brexit) before a lot of Europeans get to acceptance. And that is just one of the things we are going to have to deal with.”

Mr Sproule told the audience of 40 business leaders: “The only reason you would get permission, as the government of the day, left or right, to abandon Brexit, is if something so big came along, and the British public said, ‘Stop, concentrating on this, and start concentrating on that.’”

He said the type of scenario where this might happen would be if, for example, there was a complete collapse of the European banks.

He added: “Simon Walker, (the IoD’s outgoing director general) and myself have gone over and met David Davis (the Brexit secretary) and said, ‘Give us some insights.’

“They said, ‘Please tell your members to make plans for several scenarios.’”

Mr Sproule said there was still a degree of intransigence in some parts of the European Union.

He added: “If they were more flexible, I think they would have given David Cameron a better deal, and it might be we wouldn’t be where we are.

“But they proved intransigent. And the result of proving intransigent was, obviously, the vote that we had (in favour of Brexit) in June.”

“Where are we going with Brexit? It’s very, very difficult to say.”

He said he and Allie Renison, the IoD’s head of Europe and trade policy, would be publishing a paper outlining possible scenarios for Brexit in a matter of days.

James Sproule, the chief economist and director of policy at the Institute of Directors, has a CV which includes stints in business and the Royal Navy.

Before joining the IoD, he worked for Accenture, where he led the firm’s UK research team. He started his financial career as a merchant bank economist working with Bankers Trust, Deutsche Bank and Dresdner Kleinwort, and he went on to establish the boutique bank Augusta and Company.

Before embarking on a career in finance, Mr Sproule was a signals officer in the Royal Navy, where he remains an honorary Lieutenant Commander. He is also a former visiting fellow in the Department of Management Economics at the London School of Economics.