THE Bank of England’s chief economist has admitted a huge disconnect between the dire predictions of financial experts and the facts on the ground as the British economy finished 2016 strongly.
Andy Haldane said that it was a ‘fair cop’ to criticise economists. He even compared their off kilter predictions to Michael Fish’s notorious 1987 weather forecast when he dismissed hurricane warnings just before one of the greatest storms to ever batter the UK.
Haldane offered the modest excuse that contemporary economic models were not able to cope with ‘irrational behaviour’ among consumers. But the Bank of England now faces redoubled criticism from many Brexiters who sensed bias in the BoE’s predictions of a dramatic slowdown.
Britain’s services sector polished off a hatrick of solid performances from the manufacturing and construction industries. The sector, which includes transport, hotels and banks, grew at the fastest pace seen in 17 months in December as the wider economy grew 0.5 per cent in the year’s final quarter.
The news was in stark contrast to pessimistic predictions from many forecasters who warned that growth would grind to a standstill as the financial ramifications of the Brexit vote began to hit home.
Predictions for 2017 are now expected to be revised upwards as the momentum continues well into the New Year. British exporters are also optimistic over the prospects of a Donald Trump presidency as the tycoon is expected to cut taxes and crank up the American economy.
The Bank of England had cut interest rates to an all-time low of 0.25 per cent in August in a move to bolster confidence and keep people spending. At the time the BoE stressed that a further cut may soon be needed but, given the 2016 data, now the smart money would be on a fractional rise.