Some speculation (£) today that the Office for Budget Responsibility will shortly downgrade its 2011 growth forecast
– and hence the growth forecast in next month’s Budget. If so, then you can expect Ed Balls to crow on and on about it. He did, after all, prime the attack in his recent clash with George Osborne across the dispatch box:
Yet before the shadow chancellor gets carried away, it’s worth looking at some of the growth forecasts in recent Labour Budgets. And – surprise, surprise – they were downgraded almost every year. Here are a few examples, although there are several more that could be used:“With consumer confidence falling, with inflation rising, with no bank lending agreement, no plan for jobs, no plan for growth, no plan B – does he really expect us to believe he can meet this forecast for economic growth this year or will he have to stand here at the Budget in six weeks’ time and downgrade his very first growth forecast?”
i) The 2007 Budget predicted growth of between 2.5 and 3 per cent in 2008. In the 2008 Budget that was downgraded to between 1.75 and 2.25 per cent.
ii) The 2008 Budget predicted growth of between 2.25 and 2.75 per cent in 2009. In the 2009 Budget that was downgraded to between, erm, -3.75 and -3.25 per cent.
iii) The 2009 Budget predicted growth of between 3.25 and 3.75 per cent in 2011. In the 2010 Budget that was downgraded to between 3 and 3.5 per cent.
Moral: that forecasts are seldom exact. Sometimes they have to be upgraded; sometimes (and especially during recessionary periods) they have to be downgraded. And this is an inconvenience that afflicts past governments just as much as it does current ones – whatever Ed Balls might say.
Comments