Britain’s newest financial navel gazer is urging politicians and businesses not to make important decisions based on economic forecasts as they are rarely accurate.
Although Sir Charlie Bean is taking over one of the top jobs at the independent Office of Budget Responsibility (OBR), he claims predicting the future comes with a ‘wide range of uncertainty’ and is not a precise science.
The OBR is a watchdog tasked with overseeing government statistics about the country’s economic performance and the state of public finances.
Bean explained he wants to spread the word that economic forecasts are based on what might happen rather than on what will happen and should be taken with a pinch of salt.
Pinch of salt
“Politicians have changed policies and spent too much in the past based on favourable forecasts that have proved to have been completely wrong,” he said.
“What I think one needs to do is talk more explicitly about the risks and probabilities to try to bring home just how uncertain projections are, and how it may be quite plausible for the world to turn out very differently from the central projections.”
Bean gave the example of former Chancellor George Osborne releasing control of his economic reins on the country after upbeat reports from the OBR which were later changed to reflect more negative growth.
“There is a very strong feedback to current policy, looking for ways to change things to meet the fiscal rules. There is something deeply unsatisfactory about having policy moved around a lot by variations in the central projection which is very uncertain,” said Bean.
Brexit recession fears recede
Meanwhile, Brexit claims about how the world economy would react to Britain leaving the European Union have turned out widely untrue.
Campaigners for both sides bandied unreliable and in some cases, untruthful facts and statistics which have so far not come true.
In fact, the economy has grown beyond expectations since the June vote, with the government issuing encouraging statistics showing Brexit has had no effect.
Prime Minister Theresa May has warned of tough times ahead but said she was optimistic that Britain would avoid a much predicted recession.