Brexit supporters are furious as forecasters talk down the UK economy. How dare they use little things like their professional integrity to undermine the bullish case for Brexit.
It is not commonly understood that groupthink works both ways. It is quite easy to accuse someone who disagrees with you of bias, but few of us seem to contemplate the possibility that we are biased ourselves. It also turns out that people who have read up on groupthink tend to think that those who promote views that diverge from their own are victims of groupthink, without stopping to consider whether they are similarly infected. Roger Bootle said it during the run-up to the EU referendum, ‘Remain economists are victims of groupthink’, he argued in the Telegraph.
This time he has made a similar argument, accusing the OBR (that’s the Office of Budget Responsibility) of falling victim to project fear.
While Conservative MP, and arch proponent of Brexit, Jacob Rees-Mogg accused the OBR of making ‘lunatic’ assumptions about future trade tariffs . Instead, he told BBC2s Newsnight that “until the government has developed its negotiating strategy and explained it, the OBR can only operate on a status quo assumption.”
And Iain Duncan-Smith told the Telegraph that “the OBR has been wrong in every single forecast made so far, on the deficit, on growth.”
Before the referendum, George Osborne did indeed become a full blown member of Project Fear when he made his fictitious budget – assuming a Brexit vote. Instead, in the real world we get Phillip Hammond striking a cautious note, but going for modest stimulus packages. Even so, he is hampered by projections from the OBR suggesting that a £122 billion deterioration in public finances between now and 2021 as a result of revising its projections of the UK economy down from the March Budget.
Truth is though, Mr Hammond has taken a far more liberal view on debt reduction, if he had stuck to George Osborne’s target of balancing the fiscal books by 2021 we would indeed have seen very severe austerity as Mr Osborne predicted.
Who knows if the OBR’s forecasts are right, only time will tell. As the economist, JK Galbraith once said: “The only function of economic forecasting is to make astrology look respectable.”
But the OBR is the best we have got. When it was formed, Robert Chote, the former top man at the Institute of Fiscal Studies was appointed to lead it; his appointment was warmly welcomed.
When the government makes its spending plans, it has to make assumptions about receipts, and that means it has to use economic forecasting, and flawed though OBR projections are, they may prove to be a more reliable method of predicting than the views of people who are most decidedly locked into the Brexit narrative.
If Brexit proves to be less serious than anticipated, good. Frankly the news from the EU, that, in an effort to preserve its own survival, it is taking a harder line against the UK, at a time when the world seems to be heading for more protectionism, is not so good.
In the mean-time, and as Martin Wolf pointed out in the FT, those who sit in the more extreme end of the Brexit camp, seem to want to blame the messenger.