Tomorrow's Business Today
Are the economists about to get it horribly wrong, again?
Former Bank of England rate setter Danny Blanchflower was on Radio 4 earlier, saying the Bank has got it all wrong.
It should be cutting interest rates, not raising them, he argued. There is probably going to be a recession, he warned, and raising rates in the face of that is just self-harm.
It could be a re-run of the bank crash of 2008, maybe, he warned.
That someone as left field as Danny – I really like him, but he’s quirky – can end up on the Monetary Policy Committee of the Bank of England gives hope to all radicals.
There’s no point denying that an establishment still exists in the UK and jobs go to faces that fit; but there are glitches in the matrix here and there.
The Professor was asked why anyone should listen to him, since all respectable economists are in favour of rate rises.
Because their track record is terrible and his is pretty good, was the reply.
The presenter found it odd that he could think that there are worse things than inflation. Such as unemployment.
Which is the voice of the safe-salaried (upper) middle classes. Still, they had him on.
If the ONS, the OBR, the Treasury, the Chancellor and most of the City are on the wrong side of this again, newspapers should surely rethink whom they regard as respectable commentators.
As people, economists are the best of the bunch that work in the City. Prone to self-doubt, as likely as anyone to admit they got it wrong.
Better than bankers, anyway.
As a group, they move in herds. They seem to find comfort in a consensus that is hardly ever actually right, even if it is sometimes only marginally wrong.
Back in 2008 the Queen famously asked why none of the economic experts had seen the credit crunch coming.
If they are that wrong again, no amount of PR should save them.
For our Find Out Now poll this week we asked which economic prospects worry people most – a rerun of a poll we did in July.
You can see the results below.
Press release of the day
Commentary that goes against the flow on interest rates here from the ICAEW.
Economics director Suren Thiru says: “The decision to raise interest rates looks a little ill-advised against a backdrop of economic uncertainty and financial market volatility.
“The Bank of England remains behind the curve on interest rates. It was too late to tighten monetary policy when inflation surged, and now it’s still hiking rates despite a flatlining economy and financial market turbulence.”
