On the one hand the, IoD forecasts growth in GDP of 1.2 per cent next year and warns that if that figure proves correct, Chancellor George Osborne may need to find more spending cuts – or tax rises – to meet his budget deficit targets.
On the other, while the institute says that there’s a need for greater realism about weakness elsewhere in the economy, there’s too much doom and gloom surrounding the October Spending Review.
And while there are what it calls “headwinds” holding back the economy, there are also “tailwinds” pushing it forward – corporate finances that are generally in good shape, for example, and private sector job creation – which the IoD believes should be enough to prevent a double dip recession, provided consumer and business confidence doesn’t begin to slide.
A bit like the curate’s egg, then, the IoD forecast is good in parts and it won’t be until this time next year that we know whether they have hit the nail on the head.
The IoD says that the conditions produced by “an extraordinary financial crisis, fiscal explosion and the introduction of unconventional monetary policy” mean that the level of economic uncertainty is very high.
And it admits: “In such circumstances, economic forecasting becomes what it always has been, an issue of feel and judgement,” which is perhaps something that many of us have long suspected.
So an interesting exercise might be for us all to make some predictions about the UK economy in 2011 and watch how accurate we are over the coming months. Our own “feel and judgement” is that a good percentage of us are probably as likely to get it right as the experts.
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