Economic forecasting “is to some degree in crisis”, the Bank of England’s chief economist has said after it misjudged the fallout from Britain’s vote in favour of Brexit.
Britain’s economy has performed far better than expected since the country voted in June to exit the European Union, although economists are predicting a tougher ride in 2017.
“It is fair cop to say the profession is to some degree in crisis,” Bank of England (BoE) chief economist Andy Haldane told an event hosted by think-tank Institute for Government, according to the Press Association news agency on Friday (6 January).
The BoE “had foreseen a sharper slowdown in the economy than has happened – in common with every other, almost every other mainstream macro forecaster”, Haldane added.
Britain will not be able to buy access to the single market following its exit from the EU, a former top UK official at European Commission warned, casting doubt on mooted government plans for Britain’s future relationship with the bloc.
He called it “pretty much business as usual” for the UK economy despite warnings from Bank of England governor Mark Carney that the referendum outcome could have caused a recession on businesses delaying investment projects.
“The spending power in people’s pockets was not materially dented during the course of last year,” Haldane said.
But he did not hold back from offering a forecast for the coming year.
“Do we think that (the economic climate) will last? Well there are reasonable grounds I would say, for thinking that this year might be a somewhat more difficult year for the consumer than was last year.”
British Prime Minister Theresa May has given a March deadline for triggering Article 50 of the EU’s Lisbon Treaty that will formally begin the withdrawal process.
Speaking on Thursday, British Finance Minister Philip Hammond said he hoped to maintain strong economic ties with the European Union even if the Brexit negotiations were set to be difficult.
“Of course the negotiations will be tough and they will be complicated,” Hammond told CNBC Arabia television.
British voters today (23 June) chose to leave the European Union, sparking fears over the future of the EU, the UK, and the economy, and forcing the resignation of Prime Minister David Cameron.