Should the IMF buzz off?

They are a cheerful lot at the International Monetary Fund. Perhaps because so much of the institution’s time is spent arranging rescue loans for drowning economies, and then seeing much of the money wasted or disappearing into Swiss bank accounts, it’s always glass-half empty for the IMF.

This week’s World Economic Outlook makes the traditional grim reading, with Britain at the bottom of the league. This is also traditional, and not only for the IMF. Other quasi-official bodies like the OECD or the NIESR (you don’t need to know) also tend to view the UK as the sick man of Europe, especially since our departure from the European Union.

The Daily Telegraph calculated that of 28 IMF predictions about Britain’s economy between 2016 and 2022, 25 were overly pessimistic when compared to the IMF’s subsequent estimate of actual British growth rates.

As we know, forecasting is always difficult, especially for the future, and economic forecasting is about as unscientific as you can get. Even if identical circumstances were to arise twice, the way people respond to them would not be the same. No matter how careful and thorough the analysis, or how many researchers are employed, the result is little better than a partially-informed guess.

Worse still for the IMF, the private sector now does the same job rather better, and relieved of the need to get their output past internal committees, the likes of Capital Economics or departments inside major financial companies can ensure their forecasts are up to date.

The IMF’s projections for the UK economy already look too pessimistic, not that the outlook is much to shout about. The familiar mix of policy errors, short-term fixes and fiscal incontinence, coupled with this administration’s indifference towards business, will ensure that any growth will be too small to measure accurately. With luck, we should just about avoid a recession. Above all, the cost of abandoning any sensible energy policy is only now starting to be felt.

It is quite an achievement to run an economy with taxation at its highest for over half a century yet which still yields nowhere near enough to cover the cost of a failing public sector. The IMF is too political an animal to comment in such stark terms. Speaking truth to power is too much to ask.

Yet here’s the strangest thing about Britain’s economy. Despite successive government blunders, abuse by taxation and bureaucratic complication, it seems to work – not well, admittedly, but still functioning. Someone once compared it to the bumble bee, where an aerodynamic analysis would conclude that it couldn’t fly. Yet, thankfully, it does. As do we.

Neil Collins and Jonathan Ford publish a weekly podcast, A Long Time In Finance. Free on Spotify or Apple apps.