ECONOMIC FORECASTS - WINNERS AND LOSERS

There are economic forecasts and there are economic forecasts.  David Smith, economics editor of The Sunday Times, produces a league table every year showing the accuracy of the big forecasters compared with the actual outturn.  Their forecasts are made at the start of the year and compared with the actual end of year figures for a number of key criteria.  However, this year's show quite a remarkable and stark comparison.  

I begin with the premise that for Brexiteers the Treasury and OBR forecasts are always wrong, especially if they're gloomy. Ian Duncan Smith (HERE) for example in November 2016 said the OBR forecast was "another utter doom and gloom scenario" by an organisation "that simply hasn't got anything right".

The Brexiteer's favourite economist is professor Patrick Minford who always produces rosy forecasts for Brexit, especially the no-deal kind. He is now at Cardiff University but his economic model is called the 'Liverpool' model. The Liverpool Research Group (LRG) was founded by Minford when he was at Liverpool and they use his model.

Here is the league table published yesterday in The Sunday Times:

Note the the LRG is at the very bottom of Smith's league table. They overestimated GDP growth in 2018 by nearly 100%, believing we would grow by 2.6% in 2018 compared to an actual 1.4%.

Another forecast by Capital Economics (CE) overestimated growth by almost 50%. They employ Roger Bootle another keen Brexiteer, and have criticised the OBR in the past (HERE) asking in April this year why the OBR got its fiscal forecasts so wrong. The LRG and the CE, keen Brexiteer bodies both, were the ONLY forecasters to put GDP growth at 2% or above.

The Telegraph in November 2016 ran an article (HERE) highly critical of the OBR's forecasting skills.  It must therefore be a source of immense satisfaction to Robert Chote, head of the OBR, to find that they are joint top of the league as we head into 2019.  Their forecast for GDP growth was spot on.

The London School of Economics blog (HERE) explained in 2017 why Minford's model is so wrong.  I can't find any record of IDS, Capital Economics or The Telegraph uttering any criticism of Patrick Minford and his Economists for Free Trade although they are consistently either wrong (as here) or wildly out of step with every other forecaster including the OBR.

 

It is by reading these things, stuff that you don't see splashed across the front pages of the mainstream media, that I am convinced Brexit will be a disaster, possibly a slow burning one, but a disaster nevertheless. The only question is if those who voted for it recognise it as a disaster before or after it happens.

We live in hope.