The FT has reported this morning that:
The UK's rapid rollout of Covid-19 vaccines will foster a faster economic recovery, requiring fewer tax rises than feared, official Budget forecasts will show this week, as the number of people receiving their first jab passed 20m.
Before anyone gets too excited (the FT is breathless) I should note this chart:
This comes from Andy Haldane's speech for the Bank of England last Friday. What it shows is that the Office for Budget Responsibility, which is the source of the current enthusiastic forecast, has always been wildly over-optimistic in its economic predictions, always (and I mean always) suggesting growth that failed to materialise until Covid came along.
Is this time going to be any different? I very much doubt it.
I suggest taking the forecasts with a lot more sober suspicion than appears possessed by the FT.
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What does it mean in that graph when the grey line is below the dark line?
The forecast re Covid was wrong
If I were a cynic I might be minded to think that this is a political ploy…. get everyone to forecast a rosy future and then when it fails to arrive just blame the “Brazilian variant” (or whatever you can lay your hands on). That way the government can play the “not my fault, guv” card.
It seems the effects of my first jab have worn off!! Not the COVID protection bit, I hope…… just the feeling of optimism that the jab and fine weather have given me over the last 10 days.
There are no good reasons for optimism right now
I note the unnecessary split responsibility between the Bank of England and the government in regard to what will be economic policy. But in reality this is a deliberate strategy of issuing advance propaganda for the government. Haldane wouldn’t last five minutes if he was going against it!
The same argument goes for the Office of Budget Responsibility. It too wouldn’t last five minutes if it went against government policy. We are a nation of fools to put up with this sly political propaganda from supposedly “independent” sources!
Precisely