In the spring of 2007 I hosted a convention for a collection of coverage experts. One of the maximum popular speakers turned into my old friend the economist Roger Martin-Fagg. He become his typical pleasing self, but took all of us by using wonder with the aid of suggesting that the arena economy turned into on the point of a meltdown the like of which we had never seen earlier than, and it become going to occur quickly – in all likelihood within 12 months. Yes, he predicted the economic crash of 2008 a year earlier than it honestly came about.
Now in Spring 2007 the sector economy became doing very properly thanks. Following 3 consecutive years of correct boom, averaging three.Eight% it became anticipated to fall handiest barely in 2007 to a few.6%. Meanwhile the UK changed into doing pretty well too. House charges had risen from a median of £one hundred fifty,633 in January 2005 to £184,330 in May 2007 – a rise of twenty-two.4%, at the same time as wages grew with the aid of a median of over five% according to annum among 2004 and 2007. Inflation alternatively become underneath manipulate and handiest rose via a median of three.25% within the identical length. Furthermore, among 2003 and 2007 the FTSE All Share Index grew by 49%, so universal anyone turned into feeling pretty optimistic about the possibilities for the destiny. No one, aside from Roger turned into announcing whatever approximately a recession, by no means mind a complete blown crash!
So, whilst Roger issued his dire warning, the overpowering reaction turned into to chuckle it off – within the identical way that we’d snicker at a soothsayer predicting the cease of the world. Eccentric yes, and probably to occur finally, just now not every time soon.
You can consider that those people who were there in 2007 are some distance much less probably to write off Roger’s reviews now than we might have accomplished formerly.
I was consequently pleasantly amazed, and heartened to receive his ultra-modern Economic replace, penned on 16 June. Once once more he is at odds with the mainstream view, and certainly is vital of others speaking international financial potentialities down. He opens his piece by way of saying that the press is being irresponsible within the way it’s miles reporting our financial outlook. His starting paragraph reads:
“Last weekend the Daily Telegraph had a banner headline: ‘Britain’s biggest ever collapse in GDP wipes out 18 years of growth’. This assertion is completely incorrect. I am concerned that folks that are trying to make the proper judgement name are being fed this nonsense. To be clear: 18 years ago our GDP became £1 trillion. It is now £2.2 trillion. The discount in spending in April become 20% on the preceding April. The month-to-month glide of spending averages £200bn. 20% of that is £40bn. The media, as we know, impact emotion and selection taking. That Telegraph article is therefore each economically illiterate and irresponsible