Everyone loves an apology, mainly because we all know how hard it is to say 'sorry' most of the time. Thing is, we don't relish an apology if it is about something that matters to us and we don't want to think about the truth revealed behind it.
The particular apology we are referring to comes from the Bank of England’s chief economist, Huw Pill (whose name looks like a cryptic Times crossword clue), who has admitted that he underestimated the strength of inflation from global supply chain shocks and wage pressures in the UK labour market. Is it the same as a pilot 'underestimating' the length of a runway or a surgeon 'underestimating' the number of organs there actually are in the human body? Maybe not, but it is a pretty big deal if one of the best known economists in the country admits he got his sums wrong.
Huw explained that, with the benefit of hindsight, inflation was not as transient or temporary as expected in late 2021. Good. Well, with the benefit of hindsight we wouldn't have allowed Liz Truss to get within 10 kilometers of Downing Street and would have exterminated all of the bats in the Wuhan region of China in the autumn of 2019. Sometimes, Huw, you have to THINK AHEAD.
Like asking a court to take further offences into consideration, Huw said he had also expected wage pressures to fall in the labour market when the Government’s furlough scheme ended in autumn 2021, something that largely failed to transpire as many people did not go back to work. Also, whilst he is at it, he broke his Mum's vase when he was 11 and blamed it on the dog. Sorry.
Harriet Baldwin, who is the Conservative Tory chairwoman of the Treasury select committee, is not the Bank of England's main cheerleader and she openly cricised it for allowing inflationary pressures to become embedded through the economy by failing to act fast enough when price pressures were rising from summer 2021.
Huw's boss, Andrew Bailey, got a bit uppity in the face of all the criticism and defended the Monetary Policy Committee’s record to MPs today (Thursday 9 February), saying: “We don’t have the benefit of making policy with hindsight.” None of us do, Andrew (apart from the International Monetary Fund), but we still manage to do our jobs without it. Plumbers rarely turn up at your house ten minutes before a pipe bursts, for example.
The Bank now expects inflation to fall from a peak above 11 per cent recorded in October to about 4 per cent at the end of this year. But can we believe any of that? Aren't they better telling us what happened when they get clear hindsight?
"I loved that vase," said Huw's Mum when asked to comment.
