Alan Budd and the Treasury


The Coalition has a forecasting mantra: there are two kinds of economic forecast, an  unreliable  Treasury one  influenced by politicians , and an independent forecast produced by the Office for Budget Responsibility. We know which one we prefer, it is said. Now hold on. There are some misunderstandings here  about forecasting and forecasts. First, economic forecasting is an art and not a science. The only difference that matters is which one comes closest to the truth and,  as they say,  ‘time alone will tell.’ Secondly, the Treasury team helping Sir Alan Budd is composed  of the very same people involved in the making of the Treasury’s  forecasts and uses the Treasury model. Alan Budd has made it very clear that he applies his own judgements to basically the same data. Thirdly, there is a consensus view in the making that Alan Budd’s conclusions are too optimistic, he is viewing the future though rose-tinted glasses. Pity him. In his original Budget forecast what was he to do? Was it psychologically possible to be anything other than be supportive to the Government? Imagine the difficulties for every one if he had cast serious doubt on the credibility of the Coalition  deficit  reduction programme. Fourthly, Alan Budd has an advantage over all other forecasters. He can come back to his forecast almost on whim  (as he is doing) and tell us that he was right before but the circumstances have changed for the worse: for example, a Eurozone not growing at all, the slowing of world trade and the failure to create sufficient new job in the private sector. In this way he is always right without annoying his political masters. I think that Alan Budd looks a bit dubious about all this. Is he not too long in the tooth, too sensible, too honest  to play these games? One thing is absolutely certain we shall all know how good the ‘Government determined’ forecasts turn out to be. It will be Sir Alan Budd’s duty to get nearer the truth and then to tell us all – what a shame it all turned out badly!

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Filed under Alan Budd, Coalition Government, Conservative Home, Labour Blogs, Labour Home, Labour leadership, Liberal News, Nick Clegg, Obama, Politics, Take Back Parliament, Uncategorized, Voting reform

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