'Brexit' on My Mind? Not if You're an EU Economic Forecaster

  • EU economists don't factor U.K. exit risk into GDP estimates
  • `It's not in our minds,' Economic Commissioner Moscovici says

Europe’s official forecasters see tons of things that could go wrong with the continent’s economy: a crash in China, higher U.S. interest rates, another slump in commodity prices, a Greek relapse, wars abroad and everything from bad banks and pinched corporate budgets to refugee-induced border closures and terrorism at home.

But Brexit -- a possible U.K. exit from the European Union -- isn’t one of the “downside risks” in the EU’s latest projections. Not that the risk isn’t palpable: it’s just too politically toxic to input into the forecasting software.

Pierre Moscovici speaks in Brussels.
Pierre Moscovici speaks in Brussels.
Photographer: John Thys/AFP via Getty Images

“It’s not in this forecast because it’s not in our minds,” Economic Commissioner Pierre Moscovici told reporters in Brussels on Thursday after predicting that the 28-nation economy will grow 1.9 percent in 2016.

Brexit is on the minds of most other seers, such as Goldman Sachs Group Inc., UniCredit SpA and Britain’s National Institute for Economic and Social Research -- to name three institutions that have opined on the possible economic fallout in the past 24 hours.

The European Commission’s forecast of 2.1 percent growth for the U.K. economy covers all the routine variables: domestic demand, productivity, net exports, tax revenues and so on. Supermarket profit margins merit a mention, but not the all-consuming question of whether Britain is in or out.

Or maybe a line on the “uncertain external environment” facing U.K. businesses was how the worker bees who wrote the report snuck a veiled Brexit reference past their bosses.

Moscovici would have none of it: “We are not talking about Brexit because we are all fighting to avoid that risk.”

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