Listen to Andrew Sentance if you want a good laugh

The former MPC member has made an art of wrongly calling every economic issue for the past five year

Andrew Sentance is at it again with a ridiculous column in the FT, arguing that this is not the right time to do more QE.

It is the right time to do more QE -- as the MPC minutes, out last Wednesday, made clear. As usual, "Death" Sentance has no idea what he is talking about and, if we listened to what he said, it would push the economy further into the doldrums. Fortunately, both the coalition government and the Labour Party have a different view, as they should. Sentance has wrongly called practically every economic issue over the past five years; what he says has been almost perfectly negatively correlated with what has happened. Recall: he was the guy who failed to spot the recession in the first place. On 21 September 2008, a week after the collapse of Lehman Brothers, he argued in a speech to the Leicester Chamber of Commerce:

The current prospect for the UK economy is very different to the major recessions we have previously seen in the mid-1970s, early-1980s and early-1990s. In these episodes, economic activity fell sharply for one to two years. In my view, the current outlook is for a much milder period of weak economic activity, on this occasion.

It didn't work out that way.

There are lots of other similar examples: just take a look here at his various speeches -- as he became increasingly isolated on the MPC -- if you want a good laugh.

So what did he have to say for himself, this time? Global forecasts are "not excessively downbeat", was his big claim. Well, they are. In the UK today, for example, Barclays Capital lowered its forecast of UK growth for 2011 to an average of 0.2 per cent per quarter, so now it is 0.9 per cent this year and 1.5 per cent in 2012. It called for more QE -- as has the British Chambers of Commerce and the Institute of Directors. The IMF, in its September 2011 World Economic Outlook, published last week, lowered its growth forecast compared with its June 2011 WEO projections, as follows:

  2011 2012
World Output - 0.3 - 0.5
Advanced economies - 0.6 - 0.7
USA - 1.0 - 0.9
Euro area - 0.4 - 0.6
Germany - 0.5 - 0.7
France - 0.4 - 0.5
Italy - 0.4 - 1.0
UK - 0.4 - 0.7
Canada - 0.8 - 0.7
China - 0.1 - 0.5
India - 0.4 - 0.3
Emerging and developing economies - 0.2 - 0.3
Central and eastern Europe - 1.0 - 0.5

 

I guess Death didn't notice the projections. He went on with the same old nonsense about inflation being the big ogre, which is clearly out of place and out of time. Growth is the problem but I guess he hasn't noticed that unemployment is rising:

In the UK, we missed the opportunity in the second half of last year to start to rein in monetary stimulus. And the US embarked on its QE2 programme. These policies have not boosted growth. Rather, they have led to relatively high inflation. More stimulus is likely to result in more of the same, while doing little if anything to support growth.

Inflation is slowing around the world, oil and commodity prices have collapsed over recent days and there is no wage pressure at all. More stimulus will result in more growth.

All of this on a day when the newest member of the MPC, Ben Broadbent, who replaced Sentance on the committee, made his first speech on the economy and in interviews afterwards made it clear that he was close to voting for a further round of QE. Broadbent also made it clear that he would do so if the data worsened, which it appears to be doing. Thank goodness George Osborne did not reappoint Sentance and replaced him with someone sensible -- good one George!

Vince, Mervyn, George, Danny and now Ben all seem to be on the same page. Now is the time to do more QE. Sentance, as ever, will be -- and should be -- ignored. There is a considerable chance that the MPC will move at its October meeting but almost certainly will in November, when it produces its next inflation report and new forecasts.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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