We of the NTI newsroom cannot be absolutely certain that Andrew Bailey and his top team at the Bank of England reads our bulletins, so cannot say with assurance that he has seen our criticism of the terrible forecasting he and his over-qualified team have been promulgating for years now ...
... but it seems very likely. We have, for example, pulled the whole caboodle up on turning predictions of a negative 2 per cent of something into a positive 3 per cent of the same thing within the space of a month, as well as playing around with the word 'recession' and dancing around whether the UK will have one or not this year.
Whatever the source of their internal hand-wringing they have clearly decided to do something about it (for now). The Financial Times reports today (Thursday 15 June) that the UK's premier bank has launched a review of how it makes and uses economic forecasts after coming under fire from the NTI newsroom (well, their report says 'politicians', but we all know what they mean) for repeatedly failing to predict the rise and persistence of UK inflation.
One of the motivators for this is Mr Bailey's (long-awaited) admission that it will take “a lot longer than we expected” for inflation to come down from its current level of 8.7 per cent. Internal folk with blushing red faces have apparently recognised that 30-year old financial forecasting models are not entirely fit for purpose in a world post 2008 financial collapse, a global pandemic, war in Europe and a madman in the Kremlin holding a smoking energy gun to our heads.
Who knew?
We have no idea what they make of the latest GDP numbers which some who absolutely should know better describe as something of a 'surprise'. It seems that the UK economy returned to growth in April on the back of an expansion in the services sector. Monthly economic output rose 0.2 per cent in April, the Office for National Statistics estimates, after a 0.3 per cent contraction in March. Growth in the three months to April was 0.1 per cent. However, the Bank of England are still shaking their heads in shock following the publication of 'hard employment figures' yesterday, which seem certain to force the continued upward rise of mortgage rates.
It is not a surprise that growth in April was driven primarily by services, with output expanding in retail, IT, and motor service repair. The sector makes up about 80 per cent of the economy. Output in production and manufacturing both fell 0.3 per cent. Industrial action by junior doctors and weak building output affected growth, the Office for National Statistics said.
We would like to leave the last words of this bulletin to the Bank of England, however. They just never learn. Economic growth is expected to stay flat in the second quarter, says the Bank of England, which (only very recently) no longer expects a recession this year.
Well, we will see (on more than one front).
