Who do you believe: Sunak or the IMF?

ronib

FT April 9 2018 Romeo and Fray
IMF shows poor track record at forecasting recessions.
Recessions are not rare. What is rare is a recession that is forecast in advance.
Also the IMF sometimes gets the countries wrong .

So it's not always better then.

Forecasting anything these days seems to be fraught.
Too many variables.

Even the Bank of England is backtracking on its forecasts I think I am right in saying.

As the government and the Bank of England are doing everything they can to force the UK into a recession by cutting public spending and raising interest rates I think the IMF have got it right on this occasion...

I think it depends on whether it’s growth or recession which is being predicted. It is an inexact science.

There’s not time nor inclination to wade through the masses of data online. I don’t think it’s that important.

Maisie your kind of economics means a life on the “never never” we earn more by being more productive as a nation
In the last 50 years the value of sterling has more halved against the dollar! Then it was $2.6 against sterling, you think it’s perfectly OK that everything we import is costing double, in addition we import far more than 50 yrs ago because home production is so much lower.

If the nations budget is run along your lines we are all sunk, for me the contrast is stark, I have a brother and a sister living in the US their lifestyle is way above what they could earn in the UK.

I don’t have answers, nor do politician's because if the changes needed were proposed they would loose power and the alternative government would just muddle through as has been happening.

Maisie your kind of economics means a life on the “never never” we earn more by being more productive as a nation

Katie, who exactly do we 'earn' this money from?

Japan has a deficit of %200 of GDP. Tell me they're a failed nation...

Katie59 for me the contrast is stark, I have a brother and a sister living in the US their lifestyle is way above what they could earn in the UK.

I'm sure someone will correct me if I'm wrong but the I believe the US/UK debt to GDP ratios are very close, so that can't be the reason.

MaizieD

^Maisie your kind of economics means a life on the “never never” we earn more by being more productive as a nation^

Katie, who exactly do we 'earn' this money from?

Japan has a deficit of %200 of GDP. Tell me they're a failed nation...

I’m not saying we should not borrow more but we should borrow to expand the economy, Japan has a massive electronics industry, massive car and other manufacturing industries. The US borrows more per head of the population than we do but spends it on production.

What industry we have is foreign owned, even utilities are largely foreign owned, we have little natural resources other than North Sea gas. How can the UK prosper when most of any profit is hived off by overseas companies, we had a short term gain but that has long gone.

Petera

Katie59 for me the contrast is stark, I have a brother and a sister living in the US their lifestyle is way above what they could earn in the UK.

I'm sure someone will correct me if I'm wrong but the I believe the US/UK debt to GDP ratios are very close, so that can't be the reason.

It’s because their dollar buys far more than our pound, an airline ticket costs me double, a car or a washing machine costs double, petrol costs 99cents a litre, I pay £1.60. Housing cost is lower, in addition to all that their salaries are much higher.

About the only thing that costs more is medical insurance but that does not seem to be an issue

ronib

Germany also expected to go into a recession.

I think it suits the narrative for the IMF to pit us against the government. I don’t think the IMF is that reliable. Just a gut response.

Political bias is bound to affect whether your view of a government's management of the economy is good or bad and I agree, it suits the IMF to say this. As it happens we are not doing as badly as had previously been suggested by the IMF and financiers in the EU.
Very often corrections to published figures come out a couple of months after they were announced. In any case economics is certainly not an exact science and there are no correct answers to how to run any economy. Personally I believe that there are so many variants that, in reality, nobody can give an accurate prediction.
Economists typically say "on the one hand" and "on the other hand" to cover all bases and you can rest assured that they will never admit to being wrong, regardless of how things turn out.

Katie59

Petera

Katie59 for me the contrast is stark, I have a brother and a sister living in the US their lifestyle is way above what they could earn in the UK.

I'm sure someone will correct me if I'm wrong but the I believe the US/UK debt to GDP ratios are very close, so that can't be the reason.

It’s because their dollar buys far more than our pound, an airline ticket costs me double, a car or a washing machine costs double, petrol costs 99cents a litre, I pay £1.60. Housing cost is lower, in addition to all that their salaries are much higher.

About the only thing that costs more is medical insurance but that does not seem to be an issue

Yes but you put the blame for that on 'living on the never-never'. The US lives on it just as much as we do.

In the run up to the 2010 election the Tories started talking about the Debt. Prior to that I don't think that it was an election issue. At that time some journalists and other commentators mentioned other countries that had a higher debt than the UK. - ie US 95.14% GDP; Italy 116.61% GDP; Japan 205.69% GDP. The UK was 75.67 %GDP.

So, given that the Debt has gone up and down, mainly depending upon whether the country was war or not, why, in 2010 was it such a big deal? The UK has suffered from 12 years of austerity because of the possibly mistaken belief that debt should be reduced at all costs.

People say that they don't want their children or grandchildren to be paying off our debt but we have being do this throughout our lives, as did our parents and grandparents and earlier generations did during their lives.

Speaking only of the current oldies, mainly born post WW2 have our lives been adversely affected by this debt?

Dinahmo

In the run up to the 2010 election the Tories started talking about the Debt. Prior to that I don't think that it was an election issue. At that time some journalists and other commentators mentioned other countries that had a higher debt than the UK. - ie US 95.14% GDP; Italy 116.61% GDP; Japan 205.69% GDP. The UK was 75.67 %GDP.

So, given that the Debt has gone up and down, mainly depending upon whether the country was war or not, why, in 2010 was it such a big deal? The UK has suffered from 12 years of austerity because of the possibly mistaken belief that debt should be reduced at all costs.

People say that they don't want their children or grandchildren to be paying off our debt but we have being do this throughout our lives, as did our parents and grandparents and earlier generations did during their lives.

Speaking only of the current oldies, mainly born post WW2 have our lives been adversely affected by this debt?

Indeed, the last installment of the WW2 debt to the US and Canada was only paid in 2006.

eazybee

I read a long article on Sunday about people still desperately trying to rejoin the EU, which is the purpose of your post.

Do you have a crystal ball? The OP says nothing about rejoining the EU. How rude.

Just where did you read your "long article" by the way? It helps to form a reply when you offer the source of your information.

ronib

Germany also expected to go into a recession.

I think it suits the narrative for the IMF to pit us against the government. I don’t think the IMF is that reliable. Just a gut response.

Have you become an economist, ronib? I'm not. However, even I can see the comparison between our economy and Germany's is of little use as they are so different.

Sadly, we have very little manufacturing, by comparison, to add value to our economy, while the German economy is more balanced with a greater amount of manufacturing. On the other hand, our one-track government has taken us overwhelmingly down the Service Sector, while Germany's is again more balanced in this area.

We are both amateurs, I think, when it comes to economics, so I will be happy for someone to explain why the comparison between these countries is of any use. As it is, I can't see it.

Daisy Anne but of course you realise that Carney was also wrong in comparing the economies of Germany and England. ThinkScotland.org

So for a definite non economist, I am in very good company!

I did realise that, but Carney isn't a GN member and I doubt he is interested in our opinions.

Just to add an opinion, I like the more tempered mix Germany has. Where we may soar or fail (not good for most households) they tend to even out.

Reuters, yesterday

BERLIN, Jan 30 (Reuters) - The German economy unexpectedly shrank in the fourth quarter, data showed on Monday, a sign that Europe's largest economy may be entering a much-predicted recession, though likely a shallower one than originally feared.

Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said. A Reuters poll of analysts had forecast the economy would stagnate.

In the previous quarter, the German economy grew by an upwardly revised 0.5% versus the previous three months.
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A recession - commonly defined as two successive quarters of contraction - has become more likely, as many experts predict the economy will shrink in the first quarter of 2023 as well.

"The winter months are turning out to be difficult - although not quite as difficult as originally expected," said VP Bank chief economist Thomas Gitzel.

"The severe crash of the German economy remains absent, but a slight recession is still on the cards."

TBH a forecast is just a prediction. I look at a number of weather forecasts, all using the same data and often with slightly different conclusions so I just choose the best one but carry a brolly , just in case!

Are you surprised other countries may go into recession foxie?

Just to point out that energy costs will double in Germany over the coming months….and as a manufacturing nation this is bound to have a more pronounced effect than on a service economy. I don’t see any mention of that.

It will, but we are far more beholden to our services and they can crash from one day to the next as we have seen. My feeling is that a balance give a better long-term return for those in that country. You don't have to agree

Good point there ronib

Quite a few countries in Europe are not doing all that well GDP wise, but will bounce back given time.

ronib

Just to point out that energy costs will double in Germany over the coming months….and as a manufacturing nation this is bound to have a more pronounced effect than on a service economy. I don’t see any mention of that.

Energy prices still won’t be anywhere near as high in Germany as they are in the UK ronib.
ec.europa.eu/eurostat/statistics-explained/index.php/Electricity_price_statistics

Casdon the doubling of energy prices in Germany will take place over the coming months and I don’t think the graphs have predicted this as relating to 2022?

cc

ronib

Germany also expected to go into a recession.

I think it suits the narrative for the IMF to pit us against the government. I don’t think the IMF is that reliable. Just a gut response.

Political bias is bound to affect whether your view of a government's management of the economy is good or bad and I agree, it suits the IMF to say this. As it happens we are not doing as badly as had previously been suggested by the IMF and financiers in the EU.
Very often corrections to published figures come out a couple of months after they were announced. In any case economics is certainly not an exact science and there are no correct answers to how to run any economy. Personally I believe that there are so many variants that, in reality, nobody can give an accurate prediction.
Economists typically say "on the one hand" and "on the other hand" to cover all bases and you can rest assured that they will never admit to being wrong, regardless of how things turn out.

Thought I’d use the quote for cc as think this a really good comment.