Quite so Professor, quite so

It could be that the UK is heading the world into a downturn: it’s happened before.

It could be Brexit, which is what most commentators outside the UK think.

What it is not is good for the conventional view of the economy.

The conventional view of the economy is that there is a business cycle, Gordon Brown did not abolish it. It’s largely diven by animal spirits, something that uncertainty undermines.

Thus Brexit, uncertainty, lack of animal spirits, well, why not a recession?

That’s actually the conventional view.

And who it is also not good for is those Brexiteers who said that those who suggested Brexit would cause a downturn were wrong. We’ve now got to the point where that prediction can be tested. And those who made it, me included, are being proved right.

No surprise there then. It was glaringly obvious.

Mrs – Ex might be able to correct him on this. A doctor can confidently predict that someone will die. It’s the timescale over which the prediction is made that matters. A century is piss easy and useless. The moment people vote to leave the EU is useful but wrong.

25 thoughts on “Quite so Professor, quite so”

  1. Wasn’t the prediction that a VOTE for Brexit would trigger an immediate recession, collapse in investment and plagues of locusts which would necessitate Osborne’s “punishment” budget?

    I think it was, and the beauty of history is that we can quite clearly see that the prediction was wrong. Restating that prediction now is not the work of honest people.

  2. My, how decadent we are.

    ‘We’ve now got to the point where that prediction can be tested. And those who made it, me included, are being proved right.’

    Cos his being right is more important than the economy. A down turn is fine if it shows him right. And he speaks for the millions of Remainers who like their grapes sour.

  3. A downturn in China, Italy, Germany etc. could similarly start a recession. Why do remainers think that the world revolves around Britain, whilst simultaneously believing that Britain is too small to stand on its own?

  4. Tim

    Surely the other article ‘The price of meltdown’ is ripe for a takedown – it simply has to be seen to be believed. Is there any man outside of a secure facility with a more advanced case of derangement?

  5. To quote from one of Andrew Neil’s usually brilliant Tweets:

    Now that Q4’s very weak growth figures are in we’ll no doubt hear more about being slowest economy in G7. Here are prelim. stats for 2018 growth:
    US 3%
    Canada 2.1%
    UK 1.4%
    Germany 1.1%
    France 0.9%
    Italy 0.1%
    Japan 0%
    Lesson: H2 2018 saw SERIOUS slowdown outside N America

    Of course, as anyone involved in business knows, uncertainty kills investment. Which is why we just need to get on with it.

  6. Which particular prediction of a downturn is he referring to? The one he made this year? The two or was it three he made last year? The predictions he made in 2016? ’15?

  7. Gordon Brown didn’t abolish the business cycle, but the amplitude of the cycles is much lower. Neither the booms nor the busts are as significant as they once were, at least outside the Eurozone. Some good lessons were learned after Black Wednesday (1992) and after the 2007-08 financial crisis; we’ll probably be ok for a generation until the people who learned those lessons retire. Even the 91 year old Paul Volcker gets hauled out of retirement every once in a while to tap his wisdom. Boom and bust has certainly been tamed.

  8. I’ve booked a family trip to Eurodisney on 5 April, was I wise?

    Because Richard Murphy seems to be predicting the coming of the 4 Horsemen of the Apocalypse at midnight on 29th March.

  9. @Andrew M – how do you know the amplitude of the cycle is lower? We are still only coming up from the (very deep) depths of 2007-2010? Seems like a pretty deep well to come up from – we can’t possibly know if the amplitude is changed.

    Brown was banging on about boom and bust (and no longer having it) right from the start of the Labour Govt in 1997 and onwards. Christ, even the Graun listed when he talked about it here: https://www.theguardian.com/politics/2008/sep/11/gordonbrown.economy

    He kept stating it was dealt with, gone – and then the biggest bust for decades happened under his cycloptic ‘watch’.

  10. It will be interesting to see how many of their problems the EU tries to pin on Brexit and for how long. I’m thinking minimum of a decade

  11. Andrew M: Boom and bust has certainly been tamed

    It might be a little early to say that. The Eurozone has barely and only patchily recovered from 2008 and could be heading downhill again quite quickly. With interest rates already at 0% it’s not obvious where the stimulus for recovery will come from unless from Berlin and EU satrapies.

    BniC: …how many of their problems the EU tries to pin on Brexit

    The problems of the Eurozone belong within the Eurozone which doesn’t of course preclude the UK Parliament from having inadvertantly negotiated its way cleverly into picking up the bill for the very costly debacle.

  12. My theory on the lack of a more pronounced down -turn is that when Carney cancelled interest rate rises it was , for ordinary households a bit like a 2% cut and it was this that fuelled the post referendum consumer and borrowing boom.
    The evidence was always quite clear that business did not like it and the down turn now looks sharp by UK standards
    The forecasts are quite gentle , I is a question of less growth not going backwards but as we know , experts can only work with models and this is the first Brexit

    It could easily be much much worse than the Treasury think

  13. Newtwattier, if you are going to refer to history, why not try to get it right? In August 2016, the pound had suffered a devaluation equivalent to a 2% reduction in interest rates, according to the BoE rules of thumb. The evidence suggested that import-led inflation was growing. And Carney reduced interest rates further like a swivelled-eyed remoaning lunatic.

    Nor should you ignore that the Eurozone is contracting strongly – if Germany is in recession then the rest are going to feel pain.

    Despite Carney’s incompetent management the UK economy has been resilient since the referendum but if your major partners are struggling – and Remoaners with thumbs up their bums like to tell us how significant the EU is to our economy – then even facepainting fools will feel the pain and love it. Osborne is desperate for the pain, for example

  14. So according to Newmania the reason we didn’t have a downturn like he predicted (oh please don’t try and say you didn’t) was because somebody did something that knocked all those predictions off track.

    That same person who, like the rest of the establishment, made predictions that took no account of the chances of people like himself sound things that would knock the irreducible off-track.

    In other words lying twats.

  15. If the cnut was so certain of the outcome and the timing then why didnt the fat fcuck put his money where his mouth is?
    When he rolls up to his next gig in a Lambo then I’ll start believing he knows the difference between his arse and his elbow.

  16. “Boom and bust has certainly been tamed.”

    The moment you start believing that is the moment the next super-cycle gets into gear………….there may well be factors why the obvious effects of boom and bust have ameliorated in recent times, there is absolutely no guarantee that those factors will continue to have an effect, or won’t be overcome by other completely unforeseen events.

  17. Agreed. The only way to prevent boom & bust is to lock the economy into bust. Which would suit the Left. To them, locked into bust would be a feature, not a bug.

  18. @Newmania

    I agree with you. I predict that a recession might happen, or it might not and if it does or doesn’t it might or might not be because of some factors and not others or possibly the other way round.

    I am confident that at some point in the future I will be able to show that my prediction was accurate.

  19. I can predict that whatever it consists of, there will be a lot of it.

    You don’t get to have rolls of neck-flesh cascading over your shirt-collar by starting the day with unsweetened tea and a dry biscuit.

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