2 Feb 2011

IFS forecasts: mummified economy?

Surrounded by death masks and shrouds, the IFS is giving its economic forecasts on the bowels of the British Museum. They are marginally but significantly gloomier than the OBR (proprietor: Robert Chote, formerly of the IFS parish).

Having adjusted some statistical calculations, taken into account other economies’ slow growth, they come up with predictions of persistently sluggish growth. The government’s programme of cuts will be a “major drag on growth over the next few years.”

Michael Dicks of Barclays Wealth has done a re-think of how growth is predicted. You can see his slides for yourself here on the IFS site. It means he predicts 1.5 per cent cumulative gap between his growth forecast plus the OBR’s.

But as the IFS report puts it, “the risks appear skewed to the downside” and it could be quite a lot worse. 

Both Barclays and the IFS conclude that having a government “plan B” if the economy under-shoots would be sensible and desirable.

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5 reader comments

  1. polit2k says:

    To continue the theme: Google Street View Lets You Visit Inside Museums – http://www.businessinsider.com/google-art-project2011-2
    Pity about the UK economy, but inevitable. Corporate tax rules still reward unhealthy levels of leverage.

  2. Saltaire Sam says:

    I fear that in a year’s time ‘I told you so’ will be of little comfort

  3. Philip Edwards says:


    Well, if we’re going to start using knockabout terms like “mummified economy” and “skewed to the downside” why not go the whole hog and tell it like it is?

    We could start with “Same old cowboy rip off economy.” Sounds about right to me. Pithy, too.

  4. nickshaw says:

    The only way to have no disagreement about the economic facts is to have just one economist.
    Come to think of it – not a bad idea!

  5. Notayesmanseconomics says:

    It is easy to get caught up in the doom and gloom of our last official GDP figures. However as I reported today we have seen this.

    “There was a purchasing managers report for the UK manufacturing sector released yesterday and it reported this.The Markit/CIPS survey for the purchasing managers’ index rose to 62 in January from 58.7 in December, the highest reading since the survey was created in 1992.”


    “January data signalled a solid expansion of activity in the UK construction sector, with the seasonally adjusted Markit/CIPS Construction Purchasing Managers’ Index™ (PMI™) posting 53.7, up from 49.1 in December.”

    Unfortunately both reports indicated that there are inflationary issues too in our economy. But we are seeing growth in both manufacturing and construction. Let us cross our fingers for the services sector tomorrow.

    As to the forecasts by the IFS, journalists love them because they give them something to report but forecasts like that are rarely right I am afraid! You might just as well ask for a plan C in case the economy overshoots…

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