Reasons to Be Cheerful – Unless You Work at the OBR
The OBR was wrong in its most recent deficit forecast – out by a mere £30 billion (so far) for the “deficit black hole”. This chart is based on their November 2022 Economic and Fiscal Outlook (EFO). This morning in a sheepish release they admit the deficit is a mere “£22.0 billion below our forecast profile in the headline figures and £30.6 billion below profile on a like-for-like basis”. If you are making forecast errors of that magnitude on a three-month time horizon you are simply not credible.
Good news on the size of the deficit black hole came as:
- Composite PMI was published this morning and hit 53.0 (above 50 indicates the economy is growing) against the consensus forecast of 49 (contraction). Beating the Euro Area (52.3), France (51.6) and Germany (51.1)…
- On top of that the Public Sector Net Borrowing figures for January 2023 were out this morning and they show the books in a surplus of £5.4 billion against market expectations of a deficit of £6.95 billion.
- Last Friday UK Retail Sales for January 2023 came in at up 0.5% month-on-month against expectations of down 0.3%.
- On Wednesday inflation came in at 10.1%, a smidgen lower than the market consensus forecast of 10.3%.
- On Tuesday Average Earnings came in at 6.7% against a consensus of 6.5%.
- Also on Tuesday the number of people in work rose by 74,000 against the market forecast of 40,000.
- The UK Natural Gas trading price fell to the lowest since August 2021 – less than it was before the invasion of Ukraine.
- The 2022 Full Year GDP growth rate was the highest in the G7 for the second year running.
- To top all this good news off the FTSE 100 hitting 8,000 puts it at an all-time high.
This all seems to run counter to the narrative of the BBC and the Labour Party that the economy is in a never-ending downward spiral and is a basket case compared to Britain’s peers. Get a grip people!