Crash a 'Fish moment' for economists

0

The also-ran to predict the financial crisis was a «Michael Fish» moment for economists, the Bank of England’s chief economist has weighted.

Andy Haldane compared financial forecasts to the famously inaccurate forecast by the BBC weatherman, in front of the UK’s great storm of 1987.

He said the profession was «to some degree in crisis» grasp the 2008-09 crash and the Brexit vote.

The Bank denies claims it transferred gloomy forecasts to support the Remain side.

Mr Haldane was speaking to an audience at the Set up for Government in London on Thursday, when he made the comparison between economists and endure forecasters.

Kamal Ahmed: The Bank’s ‘Michael Fish’ moment

He pronounced economic models had been «rather narrow and rather fragile», which was «beautiful as long as the going was good» but when the world was «tipped upside down» by the 2008-09 critical time, they had failed to cope.

«Turns out, that was a massive oversight,» he alleged.

«Could we find a way out of the trap? Of course we could. Let’s go back to a different critical time, which is the crisis, not in economic forecasting but in weather forecasting, that fruited from the 1987 storm.

«Remember that? Michael Fish leave a mark on up: ‘There’s no hurricane coming but it will be very windy in Spain.’ Very much similar to the sort of reports central banks — naming no names — issued pre-crisis: ‘There is no wind-storm coming but it might be very windy in the sub-prime sector.’

«Look at how sickly forecasting has changed itself in the period since. Actually there has been a shocking improvement in our capacity to forecast the weather… a revolution in weather vaticination.

«Much more data is being thrown at the problem and that has broached about a transformation. And some of the self same could be true if we manoeuvre from weather forecasting to economic.»

‘More difficult year’

Begged whether there had been the economic «hurricane» forecast after the Brexit opt, Mr Haldane quipped: «It’s been very windy in Spain.»

But he told the audience at the Begin for Government: «It’s true, again, fair cop. We had foreseen a sharper slowdown in the conciseness than has happened, in common with almost every other mainstream macro-forecaster.»

The Bank of England and the Moneys were accused by Brexit campaigners — including two former Conservative chancellors — of «huckster phoney forecasts and scare stories» during the EU referendum campaign to «frighten the electorate into preference Remain».

Since the referendum, the UK economy has so far not performed as predicted, with GDP excrescence at a better-than-expected 0.6% between July and September.

However, the value of the confine has fallen about 17% since Britain voted to leave on 23 June.

Mr Haldane required the fact that the UK economy had held up better than predicted in the aftermath was a «quite good thing», putting it down to consumer confidence and the housing market-place.

He said it was «almost as though the referendum had not taken place» and that people’s expending power had not been «materially dented» in 2016.

But he added there were «well-thought-out grounds» for thinking 2017 might be a «somewhat more difficult year» for the consumer as the become associated in the exchange rate began to affect prices. But he said there was «nothing ineluctable» about that — it was just a «best guess».

‘Objective analysis’

Entrance Secretary Chris Grayling, who campaigned for a Leave vote during the EU referendum, determined the BBC he was «very pleased» the Bank of England had «accepted it got it wrong» on its forecasts after the Brexit sponsor, and he had «no doubt they’ll learn the lessons».

«There is a proud tradition in this countryside of economists getting it spectacularly wrong from time to time,» he about.

He added: «It’s a tribute to the work the government has done over the last six years that we still be experiencing the fastest growing economy in the G7.»

Bank of England Governor Mark Carney imparted the Treasury Select Committee last year that the Bank’s view before the EU referendum had been «analytically based and objectively given», annexing: «It is not a political opinion, it is an economic opinion — it’s a judgement, it’s a judgement based on scrutiny.»

In 2012, on the 25th anniversary of his infamous weather broadcast, Mr Fish said he will-power be a happy man if he could «take every single copy of that [televise] to my grave».

Referring to Mr Haldane’s remarks on Friday, as «Michael Fish» prolonged to trend on Twitter, the weatherman tweeted: «I reckon that Andrew Haldane, chief economist at the Bank of England, owes me a gold bar or two!»

Leave a Reply

Your email address will not be published. Required fields are marked *