Peter Hoskin

Cable’s punditry could come unstuck

Cable's punditry could come unstuck
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"It's not imminent. But you can see this happening." So sayeth Vince Cable about the prospect of another global financial crisis, in interview with the New Statesman today. To be fair, you can see his point: there is a pervasive sense that the contradictions of the banking sector still haven't been fixed, and — as I have written recently — our economy, and economies worldwide, are still afflicted by debt of all varieties. But that's not going to calm those Tories who regard Cable as a combustive liability. In the weeks since the Lib Dems'  annihilation at the polls, the Business Secretary has increasingly reverted to his pre-coalition form: a professional commentator on the state of the economy. Few other ministers — if any — would be willing, or able, to play pundit quite so freely as the Business Secretary does.

There's more elsewhere in the interview. "We don't have an underlying inflation problem," urges Cable, "The Bank's job, as the governor keeps pointing out, is not to look at today's numbers, but to look 18 months ahead." I assume his point is that inflation is expected to fall back to target levels within the next two years, after oil prices and consumption taxes settle back to normal. But I wouldn't have so much confidence in the Bank's ability to "look 18 months ahead," if I were him. Citi recently put together a graph which shows the difference between the Bank's inflation forecasts and the outturn a year later. It doesn't speak well of their soothsaying abilities:

Besides, other forecasters have inflation remaining above target for the rest of this Parliament. Forget "underlying" — this could be a political problem for the coalition for some time to come.