There is a weird psychology behind economic forecasts. We know they are going to be wrong, because they always are. Yet such is our appetite for information – any information – that nevertheless we can’t stop ourselves taking them seriously.
The Sunday Times this morning has gone big on a report by serial doomsayers the EY Item Club claiming that the government needs to move quickly to obtain a transitional deal on Brexit or face a collapse in business investment. Even with a deal it predicts that the growth in business investment next year will fall to 1.5 per cent, from 2.1 per cent this year.
Maybe. But then again, maybe not. There is absolutely no evidence from previous EY Item Club forecasts to suggest that this is better than a figure plucked out of the sky. In July 2016, for example, just after the Brexit vote, it revised its forecast for economic growth over the course of 2016 from 2.6
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