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15 February 2011

I’m no “harbinger of doom”

The London Evening Standard is talking tosh.

By David Blanchflower

It’s great having a blog where you can respond to all kinds of tosh. The following appeared in the Evening Standard‘s City Spy section today:

Harbinger of doom David “Danny” Blanchflower says it is “perfectly feasible” that the economy will shrink again in the first and second quarters of 2011 after the slump at the end of 2010. After all, the ex-Bank of England rate-setter says, the National Institute of Economic and Social Research is forecasting “an average of only 0.1 per cent for the two quarters”. No, it’s not, Danny. It thinks the economy will grow by 0.7 per cent in the first quarter and 0.3 per cent in the second quarter – not great, but better than those desperate for the government to fail would like.

Why don’t we look at what NIESR says – try this for size, from their website dated 1 February 2011:

Growth in 2011 will be lacklustre. The economy will expand by 1.5 per cent, barely higher than the 1.4 per cent expansion in 2010. Some of the output lost to the exceptionally poor weather in late 2010, when GDP fell by 0.5 per cent, will be regained in early 2011, but the average rate of growth across the two quarters will be just 0.1 per cent.

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Isn’t that what I said? Actually it is:

Third, fiscal austerity is going to impose a major downward pressure on growth, which is going to struggle to get anywhere near 2 per cent in either 2011 or 2012. Indeed, it is perfectly feasible that Q1 2011 and more likely Q2 2011 will see negative GDP growth or even both. NIESR is forecasting an average of only 0.1 per cent for the two quarters.

Correction: see comments below.