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… 

3 Ways the ONS Says Snow Slowed Growth

Faisal Islam says linking the disappointing 0.1% growth figure to the bad weather is “laughable”. Guardian deputy editor Paul Johnson tweets: “ONS says weather nothing to do with it”. If you actually read the ONS release rather than the Remain spin, they confirm the snow did have a “limited” impact on slowing growth, in three separate ways, on retail trade, petrol sales and construction:

  • “some impacts on GDP from the snow in the first quarter of 2018 have been recorded for construction and retail sales”
  • “The fall in retail trade was driven by a decrease in petrol sales. This could be attributed to adverse weather conditions, which impacted on travel” 
  • “There is some evidence of an impact of the bad weather on construction output… 3.3% fall in construction was the largest downward pull on Q1”

The impact might have been limited overall, it’s just not accurate and snow joke for the Guardian to report “ONS says weather nothing to do with it”…

Quote of the Day

Paul Johnson, director of the Institute for Fiscal Studies, commenting on Labour’s manifesto launch:

“Literally we would not know what we were voting for if we were going to vote for Labour.”

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Quote of the Day

Ruth Davidson on working with PM Boris

“I have worked with him when he was Foreign Secretary. I will work with whoever the Prime Minister is. I haven’t had a phone call yet to ask me to run his campaign in Scotland. I am not expecting the call. But I will genuinely judge him on the same criteria as I judge any of the candidates.”

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