Brexit was the result of fake news narratives says the European Central Bank’s chief economist
The UK’s vote to leave the EU was swayed by “negative popular narratives”, according to the chief economist of the European Central Bank (ECB).
Speaking in London, Peter Praet noted “fake news can flourish nowadays” owing to new technologies.
He then added: “The outcome of the UK referendum can be partly attributed to the decades-long development and spread of negative popular narratives about European integration.”
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Praet, who has a vote on monetary policy as an influential member of the ECB’s governing council, also said uncertainty surrounding the Brexit process could damage the Eurozone's fledgling recovery.
ECB research has previously found that up to 20 per cent of market fluctuations are caused by the effects of uncertainty.
He said: “Popular narratives act as potent multiplier of economic shocks”, with “a seeping pessimism” in the media which can change the behaviour of investors and consumers.
The uncertainty caused by these narratives presents a “downside risk” to the Eurozone’s growth, Praet said, with markets “not significantly pricing in tail risks” from possible political shocks.
Read more: Uncertainty is top challenge say UK employers ahead of Article 50
Policymakers and investors have been nervously eyeing elections in Europe’s main economies in recent weeks, with the first round of the French Presidential election due on 23 April, before a run-off second round in May.
Investors have been selling French government debt as they encounter the prospect of far-right candidate Marine Le Pen winning the Presidency. A Le Pen victory promises financial market chaos and the potential collapse of the euro currency.
However, Praet himself offered a more optimistic narrative, saying the European economic recovery is “continuing at a moderate, but firming, pace, and is broadening gradually across sectors and countries.”
Read more: UK investors are at their most confident since the Brexit vote
He pointed to strengthening domestic demand as the “mainstay” of real GDP growth in the Eurozone, after a year in which trade was weak in the first six months.
The central bank had helped deliver this turnaround, he added, because it is “outside of the push-and-pull of the political process” and can provide “its own stabilising narrative” on inflation expectations.