‘We’ve done quite a good job at demonstrating the limitations of economic forecasting,’ half-joked Office for Budget Responsibility Chairman Robert Chote at the start of his Treasury Select Committee appearance this morning. And he spent a lot of his answers emphasising those limitations, while robustly defending himself against charges that the OBR is just making it up. His challenge was to explain to sceptical MPs why we should pay attention to the OBR’s new forecasts, given that their previous ones have missed by so much.
For the OBR’s economic forecasts — rather than its forecasts for the public finances — Chote admitted that ‘we don’t have access to any information that other forecasters don’t.’ There’s no magic trick that makes their growth forecasts any more reliable than anyone else’s. ‘So why not use the average of independent forecasts?’, asked committee chair Andrew Tyrie. The reason is simply that the OBR needs not just the headline forecasts, but the various specific forecasts for different aspects of the economy.
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