The Bank of England's prospects are lamentable, says ALEX BRUMMER
Here's something we can all relate to. Economics was already labeled as the 'dismal science' by the essayist Thomas Carlyle in the 19th century.
Nothing seems to have changed. Both the prediction record and the doom-laden predictions appear to be dismally off the mark.
When the Bank of England became independent in 1997, one of its architects, Ed Balls, wanted the bank to become an economic powerhouse, gaining the same respect as Germany's Bundesbank.
Lord Mervyn King, as deputy governor and then governor, tried to make this possible.
Despite Cambridge's history of economics illustrated by John Maynard Keynes, King lamented the fact that Britain simply did not produce enough PhD economists and had to look to Italy for recruitment.
Wink: Instead of being seen as a source of wisdom, the Bank of England has become a byword for bad predictions and groupthink
The Bundesbank's reputation as an economic powerhouse waned when responsibility was transferred to the European Central Bank thanks to the late Jacques Delors.
By establishing the ECB in Frankfurt and filling it with exiles from the Bundesbank, it was thought that monetary orthodoxy would remain intact.
For almost a quarter of a century, Germany's grip has been diluted, often leaving the Bundesbank as a dissident shouting from the sidelines.
As for the Bank of England, despite the heavy investment in the economy, the Bank of England's forecasts are deplorable.
Instead of being considered a source of wisdom, it has become a synonym for bad predictions and groupthink.
Last month it was criticized by the House of Lords economic affairs committee (which includes Lord King) for failing to address the arrival of 'high and persistent inflation since 2021' and a lack of diversity of views in the Monetary Policy Committee has seen.
The Bank's court, its non-executive-dominated board of directors, had already acknowledged the shortcoming and called on former Federal Reserve Chairman Ben Bernanke to improve his forecast homework.
Lest the Bank feel attacked, it is worth noting that it has not been alone in making harsh judgments about Britain.
Led by Christine Lagarde, the International Monetary Fund predicted that Brexit would be 'fairly bad to very, very bad' for the British economy.
Even committed opponents of Brexit would have to admit that, long queues at passport controls and arduous customs inspections aside, it hasn't been all that terrible.
The latest assessments from independent forecasters, such as audit and consultancy firm PwC, show that UK growth will surpass some of its European competitors by 2024.
The opposition Labor and Lib Dem parties continue to insist that the Tories have 'crashed the economy'.
Yes, a few weeks into the Liz Truss experiment in the free economy, it was awful.
But you have not yet heard the Labor leadership acknowledge that Britain subsequently outperformed expectations and that the data failed to show the resilience of post-pandemic output by 2 percent or £50 billion.
It is not just the British forecasts that are misleading.
The Economist magazine recalls that 2023 was a bad year for the economy in general. There was enormous pessimism about America and the likelihood of a recession. Instead, the U.S. economy improved by an estimated 2.4 percent.
That shouldn't be a big surprise, given Bidenomics' fiscal stimulus and more than a decade of monetary largesse.
Several studies have called into question deeply held precepts. It has long been thought that the US would be richer if more housing was built around growing cities.
Not true, say economists at the University of Washington. It is widely believed that social mobility in the US has declined in recent decades.
That is also false news. There are many more options than before to avoid the birth lottery.
In Britain, forecasting groups such as the Resolution Foundation and social action organizations such as the Joseph Rowntree Foundation are harping on social inequality: a growing gap between rich and poor.
Certainly, at the very bottom of the income scale, higher energy and food bills have caused pain.
Data from the Office for National Statistics shows that income inequality has fallen by 0.2 percent per year by some measures. Similar patterns can be seen in the US, despite Trump's 2017 tax cuts.
Who would have guessed that much of our economic story is just plain wrong.