IFS Forecasts About Brexit Consistently Wrong

The Institute for Fiscal Studies has been allowed a huge quantity of free airtime and column inches in the past few days to bash the Brexit dividend and talk down the economy. The Lobby takes Paul Johnson’s word as gospel. Which is odd, considering the IFS’s record on these matters…

The IFS made a substantial number of predictions about Brexit which turned out to be completely untrue, including:

  • That a vote to leave would be “seismic” and that “the economy would suffer… There’s no doubt we’d suffer in the short term”. There was no recession following the UK’s vote to leave; no abnormal change in inflation; no rise in unemployment; and no fall in wage growth…

  • The IFS said if the UK voted to leave “the stock market, would dive, making us all poorer”The stock market has risen to record highs…

  • The IFS also said that investment would dry up if the UK voted to leave: “Investment… would fall”. Net foreign direct investment flows from the EU into the UK in 2016 were the highest in 10 years…

The IFS’s forecasts are politically inflected:

  • In 2011, the IFS predicted that by 2014/15, absolute child poverty would have risen from 17.5% to 24%. In fact, it fell to 17%…

  • The IFS predicted that GDP growth in 2017 would fall to 1.6%. In fact it rose to 1.8%…

A cynic might point out that the IFS admits on its own website that it receives tens of thousands from the European Commission. But on his forecasts alone, Guido isn’t sure Paul Johnson really merits all this media veneration… 

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